SAVING THE YEN
June 17, 1998
The NewsHour with Jim Lehrer Transcript
The United States moved to help the Japanese economy. The Federal Reserve sold American dollars and bought Japanese yen. After this background report, three experts discuss what this action will do for the yen, and the prospects for an economic turn-around in Asia.
SPENCER MICHELS: In a rare move, the United States Government today intervened in world currency markets to prop up Japan's embattled currency--the yen. The U.S. action to buy Japanese yen and attempt to increase its value marks the first time ever the Clinton administration has intervened to boost another country's currency.
A RealAudio version of this segment is available.
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This comes just days after the yen reached an eight-year low against the dollar. The yen has fallen 45 percent since its peak in 1995. President Clinton spoke to Japan's prime minister this morning and soon after to reporters about the U.S. decision.
PRESIDENT CLINTON: Japan is very important to the world, especially to the United States, and to the efforts we're making to support an economic recovery in Asia, which is very important to keeping our own economic progress going. I was very encouraged by the prime minister's statement that he intends to pursue aggressive reform of their banking institutions and intends to do the things that were necessary to get that economy going again. And, therefore, I thought it was important that we support them.
SPENCER MICHELS: Japan's Prime Minister, Ryutaro Hashimoto, issued a statement stating he was "delighted to see that the United States and Japan have cooperated in exchange markets to support a strong stable yen." And he said Japan recognizes that an economic revival is "urgently needed." Today's move by the U.S. managed to prop up the yen on currency markets and boosted prices on international markets as well, including Wall Street.
Still, world leaders continue to say the Japanese economy is in a severe crisis that could affect the rest of Asia. Last Friday, the Japanese government reported a second consecutive quarter of negative growth, and indication the country is in a full recession. Last month, unemployment in Japan reached an all time high for that nation of 4.1 percent. Corporate failures have increased 38 percent from a year ago. Japanese banks are saddled with more than $600 billion in bad loans, and businesses and consumers are having a tougher time getting credit.
The Japanese stock market is down 24 percent from last year. Just today the Japanese parliament responded by approving $33 billion in tax cuts and spending as part of a larger economic stimulus package proposed earlier in the spring. The package also includes increased government spending. Now, the United States, China, and a host of other nations are calling on Japan to take even stronger action to perk up the faltering economy.