Tuesday, June 9, 1998 Published at 10:41 GMT 11:41 UK
Business: The Economy
Pressure continues on Asia's currencies
The yen's slide against the dollar is accelerating
The Japanese yen has fallen further against the dollar in trading in Tokyo, breaching 141 to the dollar at one point in the session, the lowest level since June 1991.
Late in the session profit-taking and the increased prospect that the G7 group of industrial countries would intervene to support the yen pared back the falls.
The yen was trading at 140.51 to the dollar by 0800GMT on Tuesday.
It will be chaired by US Deputy Treasury Secretary Lawrence Summers. The meeting was expected to be dominated by the situation in Russia, which last week appeared to face financial meltdown.
Last Friday US Treasury Secretary Robert Rubin said he knew of no plans to discuss currencies at the meeting.
But since then speculation has been growing that the meeting will address the falling yen. Hans Tietmeyer, head of the Bundesbank, Germany's central bank said on Monday that he hopes "the yen won't depreciate excessively".
And Japanese finance minister Hikaru Matsunaga said that "It was not precise to conclude that deputies will not discuss foreign exchange rates."
Japan has also suggested there may be bilateral talks between their representative at the talks, Vice Minister for International Trade Eisuke Sakakibara, and the US.
Mr Sakakibara, known as "Mr. Yen," has been criticised recently in Tokyo and there are some suggestions he may be moved later in the summer. And analysts suggest the Bank of Japan, not the Ministry of Finance is now running policy.
The yen is suffering under the continued weakness of the Japanese economy and worries about the debts of Japanese banks.
On Tuesday another government report suggested that there were few signs that Japan would emerge from recession in June.
Japan's devaluation of the yen has put other economies in the region under pressure.
China's yuan under pressure
The yen's slump is reverberating around Asia. In Singapore trade, the US dollar was rampant, forcing down the Indonesian ringgit, the Singapore dollar, the Thai baht and the Taiwan dollar.
The New Zealand dollar was at a six-year low, and is facing further selling pressure, after the ratings agency Moody's announced on Friday that it was reviewing the country's credit rating for a possible downgrade.
All this increases the pressure on the Chinese yuan. As currencies across Asia plummet and the yuan maintains its value, Chinese exporters find it more and more difficult to sell their increasingly expensive goods.
China has insisted that the yuan will not be devalued, but Richard Jerram, chief economist at ING Barings in Tokyo, echoes the sentiment of many analysts: "The perception, whether it is correct or not, is that if the yen keeps going down then China will have to devalue as well."
Such a move would have dramatic knock-on effects. All financial experts agree that a devaluation of the yuan would trigger another vicious round of currency depreciations across Asia.
This in turn would hamper Europe's and America's exports into the region as well.
The end of Asia's financial crisis is nigh?
However, not everybody shares this gloomy view of Asia's economic prospects.
The Bank for International Settlements (BIS), known as the central banker's central bank, predicts that the worst economic turmoil in Asia may be over, and that worldwide growth prospects look good.
In a 199-page study the BIS speaks of a "generally happy state of affairs", and says that long-running economic expansion in the United States and Britain is set to continue.
However, the Basel-based bankers say that rekindling growth in Japan will not be easy: "No-one should be under any illusions as to the magnitude of the problems still to be faced and the potential difficulties along the way."
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