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黒田元財務官のOP-ED (FT)

この2004年の日本の金融政策・為替レート政策のレビューのようなop-edを黒田氏が執筆した。日銀にmore creativeになってより金融を緩和しろと言っている。ちなみに、5月13日から17日まで韓国でADBの総会があるそうだ。これに向けて、本op-edが書かれた穿っても仕方が無いかもしれない。興味深いことだが、黒田氏のADB総会でのペーパーのタイトルは、『Transitional steps on the road to a single currency in East Asia』である。そこまで考えてこのop-edが書かれたとしたら、う~ん深い、、、のかなぁ。

Japan needs creative strategy
By Haruhiko Kuroda
Published: May 10 2004 19:27 | Last Updated: May 10 2004 19:27

It is worth considering the direction of Japanese monetary policy and exchange rate management in light of the dollar's climb yesterday to an eight-month high against the yen after a sharp 5 per cent slide in the Nikkei stock index.

While major markets are now primarily concerned with the likelihood of US interest rate rises, decisions taken in Tokyo have some bearing on exchange rate and interest rate movements around the world.

The relationship between Japan's monetary policies and exchange rate management is unique; the two are interwoven and inseparable in the Japanese domestic context, where short-term interest rates are at zero and price deflation persists.

When Toshihiko Fukui assumed the governorship of the Bank of Japan in April last year, he faced immense difficulty; the economy was weak, the Nikkei index was way below 8,000 points and deflation was in its fourth year. But in the course of just one year, the economy grew steadily, gaining about 3 per cent, and the Nikkei average reached 12,000 before Monday's fall to below the 11,000 level. While deflation persists, it has slowed.

Japanese monetary policy, led by an active central bank governor, has contributed to the sea-change in the zero interest rate climate, but it has done so in conjunction with the government's robust exchange rate management.

Along with persistent deflation, the likelihood that Tokyo's currency intervention will continue to dwindle puts further pressure on the central bank to consider other, more innovative ways for future monetary easing.

The dollar-yen rate, which hovered around ¥120 to the dollar for nearly one year and now stands at around ¥113, started to slide from May last year - and only Tokyo's heavy intervention halted further decline. From September, however, Tokyo's increasingly concerted intervention appeared unable to halt the dollar's freefall.

Amid market expectations of further depreciation of the dollar in view of America's worsening twin deficits, in its trade and fiscal accounts, the US currency hit Y105 in January.

The Japanese government spent about ¥7,000bn on intervention to support the dollar from April to August last year. From September to March 2004 alone, that amount nearly quad- rupled to just under ¥26,000bn spent in efforts to arrest the dollar's slide.

The effectiveness of Japan's intervention efforts declined sharply from September 2003. At the same time, however, the country's economic recovery gained momentum.

The recovery fuelled calls for a change in Japan's exchange rate management - in short, an end to its massive intervention. It should be noted, however, that if Tokyo's intervention had been smaller, the yen might have appreciated far more than it did - thus worsening deflation and choking off the recovery. In any case, as US growth - forecast at about 4.5 per cent this year - is likely to far outpace Japan's growth and interest rate differentials are likely to widen, the dollar may recover further in coming months. As a result, large-scale intervention by Tokyo may no longer be needed. Indeed, in April, a month when for the first time in more than a year the government did not intervene at all, the dollar recovered to about ¥110.

In the past year, the BoJ has aggressively pursued monetary easing by substantially raising the target of commercial banks' current deposits at the central bank. The target was first raised to ¥17,000bn-¥22,000bn in April last year, from ¥15,000bn-¥20,000bn. Under the new governor, it was increased twice to ¥27,000bn-¥30,000bn last May. This made sense given that the government's massive intervention was not "sterilised", or neutralised by corresponding market operations. Thus the effectiveness of intervention was strengthened while monetary conditions were relaxed through yen liquidity released through the intervention. After initially aggressive monetary easing, the bank became more cautious toward September, but in the face of a rapidly appreciating yen, it expanded the target for deposits by commercial banks twice more, to ¥30,000-¥35,000bn in January 2004.

Now, if deflation disappeared there would be no debate - and no need - for further monetary easing. But that is not likely at this point. The real issue, if Tokyo's intervention practices are to end, as we saw in April, amid persistent deflation, is that the BoJ will simply have to be more creative to ease monetary conditions. The rest of the world, meanwhile, would do well to support Japan in this regard.

The writer is special adviser in the office of the Japanese prime minister and professor at the Graduate School of Economics, Hitotsubashi University


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