Monitor

The News of the World The repercussions of the falling yen
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The Independent Culture
The Japan Times

One big worry about the falling yen is that it may spur exports to the US and reignite trade friction across the Pacific. Another is that higher domestic prices of imported products may further depress consumer spending and thus make it even more difficult to achieve the hoped-for economic recovery. Already, Japan's ballooning trade surplus is in the danger zone. Increases in import costs would hit companies that depend heavily on foreign supplies, and could even accelerate the deflationary trend in the economy. Thus a continued weakening of the yen could cause vexing problems at home and abroad. Fundamentally, there is only one way to reverse the yen's retreat. That is to put the economy back on its feet through stepped-up structural reform and expansion of domestic demand. The yen at a seven- year low of 140 yen [to the dollar] should be taken as a wake-up call to Japan's dormant economy.

South China Morning Post

The mainland is well aware of the need to confront the challenges presented by the falling yen. But the market seems intent on punishing such a display of openness, almost as if some brokers would prefer Peking to revert to its secretive ways of the past. Even the pessimists who persist in believing a yuan devaluation is inevitable, despite all the evidence, admit that it will not occur for at least another 18 months. Given the fast pace at which economic events move in Asia, that is so far into the future as to be almost meaningless. After all, who would have predicted 18 months ago that Hong Kong would now be facing such a severe downturn?

Singapore Business Times

Japan can and must do more to rid its economy of the stifling regulations that distort prices and competition and discourage inward foreign investment. It must move faster to clean up its banking system by smoothing the way for bankruptcies and asset disposals and by encouraging mergers and takeovers. And above all, it must continue to try to increase consumer spending possibly by pursuing policies that make for negative real interest rates. But the fact has to be faced that none of these initiatives is likely to bear fruit - or even happen - any time soon.

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