Will A Weaker Yen Strengthen Japan?

The Bush Administration hopes so, but it's a risky course

In the past five years of the Clinton Administration, currency traders could count on this: Washington wanted a strong dollar and a steady yen to break Japan of using cheap exports as a quick economic fix and spur its consumers to spend at home. The Clinton Administration is barely out the door, and foreign exchange markets are already buzzing that the coast is clear to sell the yen. Why? Realpolitik. President-elect George W. Bush's team seems resigned to the view that Japan has no alternative but to boost exports to halt its latest downturn. Japanese policymakers have shifted, too, and are taking advantage of the U.S. interregnum to talk down the yen.

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