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