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2013年5月12日 (日)

1ドル=100円台 円安テコに経済再生を急げ

The Yomiuri Shimbun May 12, 2013
Govt should revive economy quickly on back of yen's persistent weakness
1ドル=100円台 円安テコに経済再生を急げ(5月11日付・読売社説)

The yen, which had been on the verge of passing the 100 yen mark to the U.S. dollar for a while, broke the key threshold for the first time in about four years this week. The Japanese currency has also weakened against the euro, drifting around 130 yen.

Correcting an excessively strong yen will provide a boost to ending the nation's persistent deflation. The government and the Bank of Japan must speed up work to revive the economy by taking up this opportunity.

The yen's surpassing of the 100 yen line was triggered by dollar-purchasing and yen-selling mainly on upbeat U.S. jobs data and growing expectations of a U.S. economic recovery.

On the back of Prime Minister Shinzo Abe's Abenomics economic measures and bold monetary easing steps taken under central bank Gov. Haruhiko Kuroda, the exchange rate, which was about 80 yen to the dollar six months ago, has weakened significantly.

In favorable response to the yen's weakness, the Nikkei Stock Average recovered to the 14,000 yen mark for the first time in about five years this week. Also, on the New York Stock Exchange, the Dow Jones industrial average soared above 15,000 for the first time. It is encouraging that rapidly rising stock prices in Japan and the United States have provided brisk news for the economy.

Recovery with a virtuous cycle

Propelled by the yen's depreciation, Japanese exporters, such as automakers, have seen a boost in their international competitiveness, as well as increased profits.

If growing demand overseas leads them to increase production and capital investment, the benefits could spill over to the domestic economy, as employment and consumption are likely to improve. We have high hopes of a solid economic recovery with such a virtuous cycle.

However, caution is called for regarding possible side effects of the yen's continuing weakness. One potential concern is criticism from other countries of the yen's independent slide.

In an April meeting of Group of 20 major economies' finance ministers and central bank governors, Japan gained a measure of understanding for its explanation that the Bank of Japan's aggressive monetary easing has not been aimed at manipulating its currency downward but tackling prolonged deflation.

Japan also needs to further clarify its policy to fight deflation at a meeting of the Group of Seven nations' finance chiefs and central bank governors, which started Friday in Britain.

But it is also important that in the meeting, the G-7 countries will reconfirm the view that excessive exchange rate fluctuations are undesirable.

Side effects of yen's weakness

The yen's rapid descent is expected to result in price increases for imported materials and products, weighing on profits of companies that rely on imports. Such companies cannot help but raise prices of their products and services if they find it difficult to cover rising costs with cost-cutting efforts.

Prices of flour, cooking oil and other imported items have already been on the rise. With costs of imported fuel for thermal power production soaring, utilities have also announced a series of electricity rate hikes, hitting both businesses and households.

Price increases caused by rising costs are likely to have a negative impact on companies' performances. As a result, wages would not go up. Such side effects could create a drag on the government's envisaged growth strategy. By taking advantage of the yen's weakness, we urge the government to boost demand and eventually achieve sustainable growth.

(From The Yomiuri Shimbun, May 11, 2013)
(2013年5月11日01時20分  読売新聞)


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