The pros and cons of a weak yen continue to be debated.

With traditional monetary policy options limited and fears of a bond market rout preventing the government from spending its way out of the recession, the nation faces severe difficulties in getting its economy back on track.

It is natural for Japan to seek a weak yen as an effective means of spurring an export-led economic recovery.

I also believe depreciating the yen is one of the last options available to drag the nation out of its economic mire.

The United States has, in the past, turned to some of its major trading partners for help in lowering the value of the dollar and thus easing U.S. economic woes.

Accordingly, finance ministers and central bank governors from the former Group of Five industrial nations met at New York’s Plaza Hotel on Sept. 22, 1985, to coordinate their efforts to drive down the soaring greenback.

Thanks to the Plaza accord, U.S. companies improved their global competitiveness and the U.S. got its economy back on track.

Some observers now believe it is Japan’s turn to seek assistance in driving down the yen. But there appears little likelihood that Japan’s major trading partners will greet a prospective SOS from Tokyo with any sympathy.

Back in 1985, the strong dollar was damaging the U.S. trade posture, with foreign goods flooding into the U.S.

For many of its trading partners, the U.S. was a valuable customer.

But Japan, which continues to amass a solid trade surplus, will find sympathetic trading partners more difficult to recruit.

Although the administration of U.S. President George W. Bush remains committed to a strong dollar, any call by Tokyo for a concerted effort to depreciate the yen would only provoke fierce protest within U.S. industrial sectors.

In searching for clues on future developments on the currency market, we must continually scrutinize the U.S. foreign exchange policy, U.S. economic prospects and the flow of money within the Japanese economy.

After climbing above 125 yen last month, the dollar has since slipped slightly against the yen, and the 125 yen level now apparently suits both Japan and the U.S.

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