Currency volatility

The current strength of the yen cannot be considered an accurate reflection of the respective economic fundamentals of Japan and the United States. U.S. President Bill Clinton in his New Year's speech declared that his country's economy is in the midst of its longest-ever peacetime expansion. The U.S. unemployment rate in December was lower than that of Japan in November. The Japanese economy, on the other hand, is still not on its way to a recovery.

Prime Minister Keizo Obuchi, who visited Europe just after the birth of the euro, agreed in a series of talks with the leaders of Germany, France and Italy that stability of the yen-euro exchange rate is important to the international currency system. Obuchi also told the leaders that Japan and the United States will cooperate to promote the regulation of speculative short- term funds and of reforms to the international monetary system. These words will be meaningless, however, if they are not backed by action. It is important that effective and practical agreements be hammered out at the upcoming meetings. For this to happen, the three key currency leaders -- Japan, the United States and Europe -- must show leadership.

Needless to say, the nation's top priority must be to overcome its own factors leading to instability -- the economic slump and unease over the financial system.

-- Yomiuri Shimbun, Tokyo