Japan seeks to curb dependence on dollar<\/p>\n
SEATTLE, Washington (AFP): Japan is seeking to reduce its
\ndependency on the U.S. dollar to ensure fluctuating exchange
\nrates no longer undermine its trading position, a top Japanese
\nbanker said Tuesday.<\/p>\n
\"To bring the situation somewhat closer to major European
\ncountries is a desirable and plausible medium and long term
\npolicy goal,\" Toyoo Gyohten, chairman of the Bank of Tokyo, said
\nin an interview to AFP.<\/p>\n
\"My personal view is that one of the major reasons why Japan
\nhas to be so nervous about this dollar\/yen rate is due to the
\nfact that the Japanese economy in trade, financing, investment,
\netc. is still very much dominated by the dollar,\" he said.<\/p>\n
Gyohten said less than 40 percent of all Japanese exports were
\nquoted in yen as were less than 15 percent of all imports, a
\nsituation he compared to Germany, whose trade is conducted only
\nin the national currency.<\/p>\n
The Bank of Tokyo chairman, who was attending the annual
\nmeeting of the International Monetary Conference here, has been
\nasked by the Japanese government to hold talks in world capitals
\non currency exchange rate instability.<\/p>\n
The strength of the yen against the dollar has concerned the
\nJapanese government as it has raised the price of their goods on
\nthe world market and reduced Japan's trade competitiveness.<\/p>\n
Gyohten warned that in the short term, Tokyo did not want to
\nconvert its large U.S. dollar reserve, totaling US$154 billion,
\ninto other currencies as this would drive the dollar further
\ndown.<\/p>\n
\"That would mean additional sales of the dollar in the market
\nand increased upward pressure on the yen and the (German) mark,\"
\nhe said.<\/p>\n
Yoh Kurasawa, chairman of the Industrial Bank of Japan, warned
\nthe United States against allowing a continued fall of the
\ndollar, stating that this would prompt central banks to abandon
\nthe dollar as the world's reserve currency.<\/p>\n
Kurosawa recalled that the sterling plunged into crisis in the
\nearly 1960s when central banks shifted their reserve currency
\nfrom the pound to the U.S. dollar because of Britain's debt
\nproblem.<\/p>\n
Lessons<\/p>\n
\"We earnestly hope that the United States will draw lessons
\nfrom history,\" he said.<\/p>\n
Japan has charged the Federal Reserve is not doing enough to
\nhelp prop up the dollar on the world markets and suggested that
\nthe policy was a deliberate attempt by U.S. monetary policy
\nmakers to undermine Tokyo's trading position.<\/p>\n
The United States has been locked in a bitter trade dispute
\nwith Japan over cars and car parts and has argued that currency
\nrate discrepancies were due to Tokyo's closed trade policies.<\/p>\n
Kurosawa noted that the dollar was losing ground in many
\ncountries' reserve funds, noting that about 60 percent of the
\nforeign-exchange reserves held in central banks around the world,
\ntotaling $1.2 trillion, were held in U.S. currency.<\/p>\n
\"If the current trend continues, it probably will not take
\nanother decade before the share of the U.S. dollar falls below 50
\npercent,\" Kurosawa said, adding \"in fact, there is a risk that
\nthis could occur in a very short period. \"<\/p>\n
He called on Japan to take measures to make it easier for
\ncentral banks of other countries to hold yen funds, adding that
\n40 percent of the foreign exchange reserves were currently held
\nby Asian countries.<\/p>\n
Kurosawa said many Asian countries were looking at dumping the
\nweak dollar, either because it was fueling inflation as in Hong
\nKong or because a large part of their debt was in yen such as
\nChina, Indonesia and Malaysia.<\/p>",
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"sponsor": "Okusi Associates",
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