Japanese business and financial circles are visibly relieved by the turnaround in the dollar's value on international markets in the past two days. But there is a deep skepticism here about how long the bonanza will last. The dollar's recovery after weeks of steep decline is credited to the massive concerted intervention by the central banks of the Group-of-Seven industrialized nations. (The Group of Seven are the Britain, Canada, France, Italy, Japan, West Germany, and the United States.) But Japanese economic experts worry that the causes of the dollar's decline, deeply rooted in US trade and budget deficits, are unaltered.
``It appears to me the steep appreciation of the yen, which started toward the end of last year, has come to an end,'' Satoshi Sumita, governor of the Bank of Japan, told reporters yesterday. ``But the exchange rate is still far from stable. And the volatile situation of the market will continue. There is a persistent skepticism over the US twin deficits.''
Economists here agree the dollar has not yet hit bottom. They see a test for the dollar next week when the US trade figures for November 1987 will be released on Jan 15.
If the figures show no progress in reducing America's huge trade deficit, there is expected to be renewed selling of dollars. The progress of the past two days could quickly be erased, Japanese worry. After several weeks of record lows, the dollar gained five percent between Tuesday and Wednesday, going from a 121 level at the beginning of the week to a 127 level yesterday on the Tokyo exchange market.
Much of this rebound is a response to the entry by the US Federal Reserve Bank, in collaboration with the central banks of Japan and Western Europe, into the exchange markets to buy dollars.
Japanese monetary authorities have been urging such intervention as the fulfillment of the agreement by the Group-of-Seven industrialized nations to stabilize currency exchange rates.
The rapid and uncertain decline of the dollar has been criticized by both Europeans and Japanese as a threat to global economic growth. They have been upset by contradictory statements coming out of the US administration about whether the dollar had fallen enough.
Despite the events of recent days, Japanese officials are still uncertain about what course the US will take. Finance Minister Kiichi Miyazawa, while welcoming the joint action, said the dollar has not risen enough yet. Mr. Miyazawa complained that, ``Japan has not been getting enough support from [other central banks] in its effort to prop up the dollar.''
The dollar's recovery has also helped spark a strong upsurge on the stock markets of New York, London, and Tokyo. Tokyo experienced its second largest gain since the October stock-market crash on Wednesday.
Securities analysts, however, are generally cautious about the future of the stock market. ``Judging from the market factors, it is hard to see the possibility that recovery of the stock prices will last,'' said Kazuaki Harada, an analyst at the Sanwa Research Institute.