Japan Seeks Means To Stop Yen's Rise

But Japanese complain that imports aren't cheaper

`JETCOASTER'' is what the Japanese call those big rides in amusement parks. But the word does a good job of describing the state of international currency markets.

The only thing zooming downward faster than a roller coaster, it seems, is the value of the dollar. Analysts in Tokyo warn that unless the Japanese and United States governments come up with impressive policy initiatives to correct the imbalances in their economies, the dollar will sink further. Experts here have pretty much given up forecasting how low the dollar could go.

On the Japanese side, the yen's strength threatens to snuff out whatever energy is left in this country's lethargic recovery. Consequently the Japanese government is holding emergency Cabinet meetings to consider ways to weaken the yen.

The US dollar collected another postwar record low in Tokyo Monday, hitting 80.15 yen during a few hours of volatile trading before rebounding into the range of 82 yen.

''The dollar plunged just like a jetcoaster,'' says economist Yasuo Miyakawa of Sumitomo Bank. ''No one knows when and how the dollar's fall will end.'' A week ago, a dollar could buy 87 yen.

In Europe Monday, however, the dollar was higher against other key currencies, such as the German deutsche mark.

Analysts cited several immediate causes, including a reduced prospect that the US Federal Reserve will raise interest rates again, in light of an increase in unemployment figures. Raising rates would encourage foreigners to buy the dollar in order to invest in US securities. It also might put the US economy into a recession.

But the larger context of the currency volatility is as simple as supply and demand.

Japanese companies sell vastly more goods overseas than they import, which creates an equally vast demand for yen. Japanese tend to save their money, and their government is nothing if not fiscally conservative.

The US, of course, behaves in opposite ways. Americans import far more than they export, and the US government authorizes huge amounts of deficit spending, both of which send streams of dollars into the world. Last week's passage by the House of Representatives of a $189 billion tax-cut package over five years reinforced the market's fears that the US government is unconcerned about the value of its currency.

As analysts have argued, the forces driving down the dollar and driving up the yen are rooted in these disparities. Yesterday's volatility suggests to Mineko Sasaki-Smith, an economist at Morgan Stanley in Tokyo, that the currency markets will keep testing new highs in the yen's value until the governments involved indicate they are willing to address these structural inequities.

''The market is sending a signal,'' she says, ''that the Japanese government has failed to rectify the current account surplus.'' Recently announced measures to deregulate this economy and boost imports have been seen as weak, she adds. Sunday's local elections in Japan, in which voters rejected established political parties, indicate that the government may be too ineffective to enact real economic reforms.

The Japanese are equally unconvinced that the US government really wants the dollar to strengthen. As it stands, the dollar's weakness in relation to currencies like the yen and deutsche mark does not do significant damage to US exports, since Canada and Mexico are the two biggest American trading partners. Their currencies have weakened against the dollar.

AT the same time, a strong yen theoretically makes imported goods cheaper in Japan. But consumers have complained that they have yet to see cheaper imports.

Johsen Takahashi, an economist at Mitsubishi Research Institute, says that the US government must convince the market that it is serious about defending the dollar's value and curbing deficit spending.

Yesterday the Japanese government said it would announce a package of measures Friday aimed at turning the yen around. Officials are trying to respond to the ever-present complaints of Japanese exporters, whose costs rise with the yen.

''Unless the government takes bold actions,'' says Mr. Miyakawa of Sumitomo Bank, ''the dollar will soon fall below 80 yen.''

He urges a much-anticipated cut in the Bank of Japan's official discount rate -- the interest it charges on loans to banks -- in order to make the yen less attractive to outside investors and says the government should increase its spending on public works.

Nonetheless, some analysts say the opportunity for monetary tinkering -- raising interest rates to create higher demand for the dollar or simply buying dollars to prop up its value -- may be passed.

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