TOKYO — Japan's top foreign exchange expert declared Monday that "a clear loss of confidence in the dollar" has occurred and warned that "a major crisis is certainly approaching."
Bank of Tokyo Chairman Toyoo Gyoten, recently appointed foreign exchange trouble-shooter to the finance minister, sharply criticized what he called a lack of political leadership in both Japan and the United States and said he is afraid no action will be taken to forestall a collapse of the dollar's value.
"Although the crisis has not arrived yet, the situation is steadily deteriorating," Gyoten told a luncheon of foreign journalists. "The Americans, I'm afraid, are not fully aware of this risk . . . and they are still very anxious to retain the 'key currency' privilege with which they can finance their (trade) deficit almost without limit."
Gyoten, an internationally prominent former vice finance minister who has headed Japan's largest foreign exchange bank since 1992, lamented what he called the "loss of (America's) global economic leadership."
Many Japanese, he said, are frustrated that the skyrocketing yen threatens to stifle an economic recovery that only just began after three years of sluggishness. They complain that the United States is not cooperating to stem the appreciation of the yen, Gyoten said.
"Both sides are tempted to blame others. Both believe that a tough stance is the best policy. There is a real risk of brinkmanship," he said.
"Some hawkish (Japanese) politicians recommend the creation of a yen bloc and suggest selling off some dollars to scare American authorities. But those people . . . are not aware of the risks" of their proposals, he said.
Gyoten did not mention it, but one Japanese Cabinet minister--Transportation Minister Shizuka Kamei--recently accused the U.S. government of "trying to enslave Japanese" by cheapening the dollar to increase American exports at Japan's expense.
Americans, Gyoten said, should understand that the dollar's stability is vital both to U.S. global leadership and to its standard of living. Support for a strong dollar should be seen as "a call for a stronger America and better America," he said.
Gyoten said the world should move gradually to a new global currency system based on the yen, the mark and the European Union currency as well as the dollar.
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More Dog Days for the Dollar
The increasing trade friction between the United States and Japan took its toll on the dollar Monday, analysts said. The dollar in yen, daily closes since April 18, when the dollar hit a post-World War II low.
Source: Bloomberg Business News