That is posted by me on February 19 on another list. This should be read in the context of Rubin's repeated statements in recent months that a strong dollar is in the US interest. THE yen plunged to an 11-week low against the US dollar yesterday as speculation intensified that the world's top industrial nations are set to endorse a weaker yen to help pull Japan out of recession. The currency's dive came after Japan's chief economic planner joined the chorus welcoming a weaker yen following an interest rate cut last week to revive the economy. Taichi Sakaiya, director-general of the Economic Planning Agency, said the dollar around 120 yen was ``appropriate''. Asian currencies stumbled as the yen fell below 120 against the dollar ahead of today's meeting of the Group of Seven (G7) in Bonn to discuss currency volatility, dealers said. The Thai baht, South Korean won and Taiwan dollar were the most badly affected by the yen's dip, which came amid differences among G7 officials on how to moderate sharp fluctuations between their currencies. ``Mr Sakaiya's remarks prompted people to buy dollars,'' said Hiroshi Sakuma, a foreign exchange manager at Barclays Bank. ``It's so clear that Japan approves of a weak yen.'' Japan's Finance Minister Kiichi Miyazawa, about to leave for the G7 meeting, said on the whole G7 members would share the view that recent movements in the currency market were in line with fundamentals. Asked about the dollar's rise above 120 yen overnight in New York, Mr Miyazawa said: ``I'm closely watching the movement.'' Economists said the United States would grit its teeth and allow the yen to slide to 128 against the dollar, despite its huge trade gap with Japan, for the price of a hoped-for recovery in Japan's sagging economy. ``The US has made clear that if Japan does not recover, then it will remain a significant drag on Asian growth and therefore on world growth,'' said Jane Foley at Barclays Capital. In a Reuters survey of 27 forex strategists, the average ``comfort level'' that would be tolerated by the US for the dollar/yen was 128, although views ranged from 115 to 150. The dollar surged as high as 120.75 yen in Tokyo, its highest level since 2 December, before easing later in the day. Adding to speculation that the G7 may stamp its approval on the policy, Kyodo news agency quoted an international financial source as saying that ministers gathering in Germany may voice their support for the dollar's recent rise. Senior Finance Ministry official Haruhiko Kuroda said yesterday there was no change in the ministry's view that it was natural for the yen to fall as a result of the Bank of Japan's credit easing last week. His view echoed recent comments by Eisuke Sakakibara, the Vice Finance Minister for International Affairs, that the yen's fall as a result of the Bank of Japan's (BOJ) credit easing was natural and welcome. The BOJ last week decided to lower its target for the key overnight rate to 0.15 per cent from 0.25 per cent and this week pushed the rate down further to a record low of 0.08 per cent by supplying ample funds to the money market. Excessive yen weakness, however, could rekindle concerns over trade friction between the US and Japan. It coul also put downward pressure on Asian currencies, delaying the region's recovery, analysts said. - Agencies
