Weakening of Yen-Euro on Alertness

The exchange rate of yen against dollar exceeded 130 yen per dollar in three years and two months.

The exchange rate of euro against dollar marked 0.8754 dollar per euro in five months due to the impact of Argentine economic crisis.

The international financial markets are voicing their concern questioning whether crisis of Japan and Argentina is reality of the simultaneous weakening of yen and euro.

The exchange rate of yen against dollar in the Tokyo foreign currency market marked 130.74 yen yesterday (4pm), up 0.9 yen than the New York`s closing price of 129.84 yen on 24th. It rose to 130.95 yen per dollar during the day, which was the highest since October 1998.

Japanese Finance Minister Shiokawa Masajuro said, "The continuation of a bit weaker yen is appropriate." Director of finance Kuroda Haruhiko also incited the weaker yen saying "the weaker yen reflects the fundamental of the Japanese economy." Minister of Economy and Industry Hiranuma Takeo said, "The limit of the weaker yen is 135 yen per dollar."

The euro fell to 0.8754 dollar per euro in the New York foreign currency market on 24th. 56.2 percent of the debt of the whole Argentine banks is loans from the banks of countries, such as Spain and Germany, which use euro. This has brought in the fall of euro.

Tomita Kimihiko of the JP Morgan Tokyo company prospected that "the dollar will continue to be strong since the Japanese government keeps inciting the weaker yen and the euro also shows slackness due to the Argentine crisis."

The unstableness of the international financial market was reflected in the world stock market. The Nasdaq closed at 1,944.47, down 1.36 points, and the Dow closed at 10,254.81, down 0.21 points. The Nikkei closed at 10,254.81, down 80.64 yen (0.78 percent) in the Tokyo stock market yesterday.

Chan-Sun Hong hcs@donga.com