Word: yen
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DESCRIPTION: U.S. dollar vs. Japan's yen and West Germany's mark. Color illustration: Uncle Sam, turning his back on the dollar, reads Stock reports in newspaper...
...market's sturdiness was particularly impressive in the face of a sliding U.S. dollar, which fell 2% to 3% last week against major trading currencies. At one point the dollar traded in New York at 137.20 yen, a 40-year low, and 1.721 West German marks, the lowest in seven years. The drop apparently represented a Reagan Administration plan to abandon its policy of holding the currency steady in favor of allowing it to enter a managed decline. Many economists believe the dollar must fall 10% or more to help ease the U.S. trade deficit by making American goods more...
...prop up the price. Worse, the Federal Reserve was forced into the high-interest-rate policy that proved to be poison to world stock markets. And still the Louvre values could not be sustained. ( Last week the dollar fell to new lows against the West German mark and Japanese yen; foreign governments seemed willing to buy only enough U.S. currency to cushion, not stop, the decline...
...trade turnaround was a long time coming, but there are finally some signs of change. Between 1982 and 1986, the value of Japanese exports jumped from $138 billion to $211 billion, partly because of the yen's 50% rise against the dollar. In 1986 alone, Japan's trade surplus rose 79% from the previous year. But last spring it began to come down. By July the surplus was nearly 15% lower than the same month the year before. Meanwhile imports, spurred by growing domestic demand for ever cheaper foreign goods, were up 30% in August, compared with that month...
...yen crisis forced manufacturers to change tactics. To reap the benefits of lower wages along the Pacific Rim, many Japanese firms built new factories offshore. Matsushita, the world's largest consumer electronics manufacturer, makes motors in Malaysia, batteries in Indonesia and facsimile machines in Singapore. Sony plans to move one-third of its production out of Japan...