The dollar may "plunge" in 2008, prompting the United States, the European Union and Japan to intervene in foreign-exchange markets, according to Eisuke Sakakibara, the country's former top currency official.
U.S. economic growth may slow to less than 1 percent next year as losses on sub-prime loans erode consumer spending and bank earnings, he said in an interview Thursday in Tokyo. Sakakibara was dubbed "Mr. Yen" because of his ability to influence the currency markets during his 1997 to 1999 stint at the Finance Ministry.
"Should growth fall below 1 percent, we could see a plunge in the dollar," said Sakakibara, who is currently a professor at Tokyo's Waseda University. "Some form of intervention would be necessary to stop it, and that would require coordinated effort from all three major economies."