On the face of it, Asia needs both stronger demand in Japan and a stronger yen.
Now that a stronger yen and dearer oil are eating into profit margins, the situation may not improve soon.
In these circumstances a stronger yen and weaker bond market may be less bad news than a response to good news.
But Kikkoman buys most of its soyabeans and wheat from America and Canada, so a stronger yen actually reduces its costs.
However, the last thing the fragile Japanese economy needs is a stronger yen, which would squeeze exports and exacerbate deflationary pressures.
With Japan's economy now growing faster than the euro area and its firms' profits surging, Japan can probably afford a stronger yen.
It now also has to contend with a stronger yen, thanks in part to loose monetary policy elsewhere in the rich world.
Even a gentler slowdown might lead to a stronger yen and euro.
The Tokyo analyst expects the Nikkei to rise 30% by mid-1998, though a stronger yen may put a damper on the good news.
But is not a stronger yen and a weaker dollar just what is needed to reduce Japan's large current-account surplus and America's current-account deficit?
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Stronger Asian currencies will pose challenges: "Question One, " this column said last January, was whether Japan's rally would survive a stronger yen--and the answer is still uncertain.
Japanese companies can live with a stronger yen.
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"The latest reported comment today indicates that he'd sanction intervention to come to the rescue of exporters disadvantaged by a stronger yen, " said Andrew Wilkinson, a senior market analyst at Interactive Brokers.
The business depends on exports for 50% of its business, and the other 50% may not be so secure given that a stronger yen and an aging population are leading some companies to shift production out of Japan, including the likes of Toyota Motor.
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Put another way, because a weaker yen equals a stronger dollar, Toyota can demand fewer dollars from its American customers to achieve the same amount of yen in profit per unit.
In hindsight, there is certainly stronger dynamic support for a yen negative move rather than a dollar positive one.
James Cordier, portfolio manager, Liberty Trading, said a stronger U.S. dollar versus the euro and yen likely played a part in pressuring copper and other commodities.
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Investors in Japan are changing strategy, buying stocks of firms that will benefit from a stronger local economy after earlier bingeing on exporters as the yen weakened.
The stronger dollar against the yen had been seen as a leading catalyst for the rise in Japanese shares, but some traders said the currency market on Thursday was largely acting in response to the stock-market fall.
Just as Asia's interests are better served by stronger demand in Japan than by a policy to defend the yen, so they are better served by economic stability in the United States than by a concern to keep American interest rates low.
If this succeeds in stimulating demand, Japanese saving will fall and the current-account surplus in due course will narrow. (In the short term, however, most of the effect will be masked by a cheaper yen.) Perhaps demand in Japan is already stronger than the figures suggest.
The immediate impact of such a battle would be a stronger dollar, as has already been the case in the last month with the dollar rising against the yen.
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