Financial Times
April 4, 2003
Sir, A weaker yen, in the range of 150-160 yen to the US dollar as suggested by Kumiharu Shigehara (“A weaker currency will make Japan stronger”, April 2), could be a temporary boon for those Japanese companies that are heavily dependent upon exports. However, in light of the massive and persistent trade surpluses that Japan manages to chalk up with the US and Europe, the international acceptability of such a proposal comes into question.
A weaker yen may also induce other Asian nations, such as China and Korea, to devalue their currencies in order to maintain competitiveness against Japanese exports, leading to an exacerbation of excessive price competition and further slimming of profit margins. Furthermore, a weaker yen may not help the Japanese economy substantially, since only about 20 per cent of the total number of workers in Japan are employed in certain companies, belonging mainly to the electronics and vehicle sectors, that are internationally competitive and contribute to the bulk of Japanese exports.
What Japan needs to do is to undertake more economic restructuring that would improve the competitiveness of those industries, including construction, agriculture, and services, that employ 80 per cent of the workforce, by further opening up the domestic market to competition.
Instead of racking up greater trade surpluses with a weaker yen, Japan needs to increase imports that would lead to more domestic competition, lower costs, and increased purchasing power for the long-suffering Japanese consumer.
Ko Unoki
Tokyo, Japan
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