Suppose Y1 = $1... It Could Happen

Could the yen actually be headed for parity with the U.S. dollar? Just maybe, but not because it will appreciate that much. Talk is circulating in Tokyo about "redenominating" the yen by moving the decimal point two places to the left. Presto! One yen to one dollar.

Some politicians are urging Prime Minister Morihiro Hosokawa to push for denomi as a way to stimulate certain industries and boost pride in the currency. The pride issue may seem superfluous, but among major currencies only the yen and Italy's lira are expressed in hundreds of units to the dollar. Since one yen buys almost nothing, the argument goes, the currency's basic unit looks measly.

The idea has cropped up occasionally over the past decade and has even moved some stocks. In July, the share prices of Toppan Printing and Dai Nippon Printing jumped on such rumors. The change presumably would be of benefit to printers, paper and software suppliers, and makers of money-handling gear such as vending and ticket machines.

But most experts say the costs outweigh the benefits. "Does the government really want to waste its resources reprinting money at this time?" asks Robert Alan Feldman, chief economist at Salomon Brothers Asia Ltd. in Tokyo. Others say that in a deflationary climate, denomi would create the illusion of depressed income, thus dampening consumer spending.

A Finance Ministry official says there's no serious discussion of redenomination within the bureaucracy. That means it probably won't happen. But it's still fun to dream about buying a Big Mac for 3 yen instead of 300.