Yen Worries Send Japanese Finance Ministry Official to U.S.
A top official at the Japanese Finance Ministry met yesterday with officials from the Treasury Department and the Federal Reserve, fueling speculation in global markets that Tokyo is seeking a multinational effort to brake a surge in the U.S. dollar that is threatening prospects for recovery in Asia's battered economies.</br></br>In international currency markets yesterday, the dollar fell 3 yen from an earlier 5 1/2-year high of 134.25 yen per dollar as traders braced for the possibility that officials in the U.S. and Europe might join Japan in a coordinated effort to stem the dollar's rise by selling greenbacks.</br></br>The yen stabilized in trading today in Tokyo, changing hands by late afternoon at 132.30 yen to the dollar, but there was no signal from Treasury that U.S. officials were contemplating market action. Many analysts and investors concluded that U.S. officials were insisting on bolder economic reforms from the Japanese government aimed at boosting growth in Japan, as the price of U.S. help in halting the dollar's climb.</br></br>"I have got to believe that the U.S. is saying, `Yes, we can help, but that's only possible if you make some basic changes in your policies. Otherwise, we'd just be whistling in the wind,' " said C. Fred Bergsten, director of the Washington-based Institute for International Economics, who said Japanese officials have good reason to "fear the prospect of their currency in free fall," much like those afflicting other Asian currencies.</br></br>A standoff between the United States and Japan would be likely to exacerbate Asia's financial crisis, which took yet another turn for the worse yesterday as stock markets and currencies across the region declined sharply, led by a 6 percent plunge in Hong Kong's Hang Seng index that was followed by another 5 percent fall in early trading today (Story, Page C2).