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Week Dollar and Strong Yen

Posted June. 24, 2002 08:45,   


The weakness of dollar clouds the future of the Japanese economy. The Japanese government is closely monitoring the acceleration of yen caused by dollar’s weakness.

On June 22, Shiokawa Masajuro, Minister of Finance, attended the Democratic party members’ meeting in Hiroshima. He worried, “It’s strange. The stock market has been plummeting. Nonetheless, yen has remained strong.”

On June 21st, the foreign currency market in New York tumbled on the dark forecast for the US economy, pushing dollars down. On the other hand, yen shot up to ¥120.80 against dollar, the highest in the past 7 months. Eventually, it closed at ¥121.40, ¥2.10 lower than the previous day. New York stock market also plunged. Dow Industrial Average closed at 9,253, 177 points lower.

Japanese government’s involvement is widely expected to defend yen at 120 against dollar. Many, however, doubt the effects of the involvement.

If dollar remains weak, the Japanese economy will probably nose-dive into recession. The weakness may send devastating effects to the stock market, ruining the recovery programs. Last month, Japan announced that its economy had bottomed out. Then, it had come up with programs to boost the economy. But now, the slow New York markets may possibly pull the Nikkei Average down below 10,000 points.

Young-Ee Lee yes202@donga.com