Word: dollarization
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Dates: during 1980-1989
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...Tokyo, Prime Minister Yasuhiro Nakasone urged his Cabinet to devise emergency measures to aid the worst-hit Japanese firms and pledged to do more to calm down the dollar-yen exchange rate. On the following day, the Bank of Japan briefly intervened in the foreign-exchange markets, buying dollars to support the value of the U.S. currency. But no one could be sure that the bank would succeed, and a sense of helplessness came over many Japanese executives. Said an official of NEC, a leading Japanese electronics manufacturer: "It is like groping our way in the dark. All we want...
That may not happen for a while. The dollar has been falling partly because of the meeting last September of the finance ministers and central bankers of Japan, Britain, West Germany, France and the U.S. The officials agreed to help the U.S. reduce the value of its currency in an effort to trim the dangerously high American trade deficit, which hit a record $148.5 billion last year. These industrial powers, known as the Group of Five, were convinced that bringing the dollar down could help avert a trade war. At the time, the U.S. Congress was particularly incensed about America...
...Group of Five plan was a success: the dollar has fallen against all major currencies since the September meeting. Most important, it has declined by 27% against the yen, and the protectionist pressures in Congress have declined. But the Group of Five now seems to be in no hurry to stop what it started. The central banks, with the exception of the Bank of Japan, are making no attempt to discourage private foreign-exchange traders from continuing to push the dollar down...
While the yen's rise was causing havoc in Tokyo, it was good news for American exporters. Japanese consumers are already taking advantage of bargain prices on American wines, foods and sporting goods. But most U.S. economists agree that the dollar must decline further if U.S. companies are to become fully competitive with their Japanese rivals. "You ain't seen nothing yet," says Rimmer de Vries, the chief international economist for New York's Morgan Guaranty Trust. "Another 20% yen appreciation is absolutely necessary before the U.S. can start to work off its trade deficit with Japan." Some economists think...
...begin producing videocassette tapes in Tuscaloosa, Ala., this fall, and plans to double production of audio equipment at its Singapore plant. Says Darrel Whitten, associate director of research at Bache Securities (Japan) Ltd.: "The strong yen will accelerate this tendency to rely on overseas production, just as the strong dollar helped push American manufacturing and assembly overseas...