JIN-242 -- Snow in Tokyo and the Currents of Currency

J@pan Inc Magazine Presents:

T H E J @ P A N I N C N E W S L E T T E R

Commentary on the Week's Business and Technology News

Issue No. 242
Tuesday, September 2, 2003


++ Viewpoint: Snow in Tokyo and the Currents of Currency


Date: Sept. 19, 2003
Location: JETRO BSC Hall, Akasaka Twin Tower Main Building
Organized by: LINC Media Inc., Japan Inc. Communications KK
(publisher of J@pan Inc magazine) and the Shizuoka
Prefectural Government. We are pleased to present the second
of our ongoing program of cost cutting seminars for foreign
managers. Our keynote speaker is Mr. Andrew Fried, a
partner with IBM Business Consulting (previously PwC).

View complete Seminar information at: http://www.japan.com/shizuoka/
Registration fee: free of charge

==================EVENT =====================
The Entrepreneur Association of Tokyo - Our September seminar will
feature Caroline Pover, founder of Alexandra Press, Being A Broad,
and Go Girls, and Yuriko Miyazaki, founder of Krene Inc and vice
president of Go Girls. They will be sharing their experiences on
starting businesses in Japan and how they overcame the obstacles that
stood in their way.

Date: Tuesday September 9th, City Club of Tokyo Maple Room
(Canadian Embassy Complex) Language English
http://www.ea-tokyo.com E-mail: info@ea-tokyo.com

++ Viewpoint: Snow in Tokyo and the Currents of Currency

US Treasury Secretary John Snow's brief visit to Tokyo earlier this
week provided a useful little glimpse at an issue we think is on the
brink of becoming very big and potentially nasty. Currency issues
tend to simmer away out of sight for months at a time, but when they
boil over, they can dominate all other business and economic

In his apparently productive talks with Japan's finance minister,
Masajuro Shiokawa, Snow is reported to have covered two major topics.
The one that has emerged as the most critical is that of China's
currency, the yuan, and whether its value should be allowed to float
freely. Also on the agenda, though dealt with rather more diplomatically,
was the question of Japan’s repeated efforts to manipulate the yen.

It is not hard to see how closely the two issues are linked. Japan wants
to be bold in joining US calls for China's currency to rise to a more
realistic rate against the dollar and yen: Japanese manufacturers are
being hurt just as badly as Uncle Sam's. But Shiokawa is forced to walk
on eggshells because of his own record with interventions on the value
of the yen. In line with many Japanese finance ministers over the years,
Shiokawa has indulged in some massive dollar-buying sprees in an effort
to keep the yen weak when Japan's exporters need their goods to look

At Snow and Shiokawa's meeting, it is known that the former made it
clear that he wanted Japan to stop its interventions. The yen surged
briefly on expectations that he might get his wish.

What bears closer examination, though, is why Snow should suddenly be
so keen to end all that dollar-buying by the MOF -- a phenomenon that has
certainly helped preserve the Bush administration's "strong dollar policy."

We think it may all come down to good old US business interests and a
looming election for George W. While the White House is still officially
flying the flag for a bullish greenback, a lot of corporate and commercial
voices are making audible calls for the dollar to loosen and let American
exporters have a little run at helping the economy. And Bush is well aware
that he can’t afford to ignore them.

All that remains is to see how much leverage America has over Japan at
this point. On the eve of Snow's visit, he duly received a call from a
powerful lobby of US corporations and farmers demanding that the issue of
yen manipulation be addressed at the meeting with Shiokawa. When corporate
America says jump, it has become political suicide not to ask: "How high?"

--The Editors

================= EVENT ======================
Date: Nov. 19-21, 2003
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Written and edited by J@pan Inc staff (editors@japaninc.com)


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