Contact

News

 

Japanese Yen and Inflation


Over the past three months the Japanese yen has slid 14 percent to its lowest level since 1998. Today Japan's economics minister, Heizo Takenaka, denied that his government is trying to weaken the currency further in an effort to revive the economy. Marketplace's Jocelyn Ford has more on what the weak yen means for the United States.

Ford: "The idea is that, if the yen swoons, exports will pick up because Japanese products will be cheaper overseas. In other words, a Toyota will be more competitively priced than, say, a GM.

That's why in the past, when the Japanese government appeared to be encouraging the yen to weaken, U.S. officials often complained. Lakshman Achuthan, with the Economic Cycle Research Institute, says this time the weaker yen is a double-edged sword for the U.S."

Achuthan: "The negatives show up in the U.S. manufacturing sector. In a perverse way it's also a positive for the U.S. economy. It's our expectation that the U.S. economy begins to turn up in early 2002 -- and with a resumption of growth there comes some concern about inflation. If the yen is weak and the Japanese economy remains in recession, then the U.S., even while its growing, can import de-inflationary pressures from abroad."

Ford: "So cheaper Japanese goods help keep inflation low here. For Marketplace, this is Jocelyn Ford."

The yen recovered a tad today, closing in North American trading at about 132.9 to the dollar.
VIEW THIS ARTICLE ON NPR