WASHINGTON--Calling the Yen, €the most misaligned currency in the developed world today, the Chief Economists from the three major U.S. automakers today urged the U.S. government to work with other countries to take immediate action to address serious problems caused by Japan misaligned currency. In joint remarks, they called on the new Japanese government to dramatically change direction and allow the yen to strengthen to reflect its true value.
The Chief Economists warned that the lack of action by the U.S. government and international monetary agencies has not only created a competitive imbalance to U.S. automakers, but has also created huge distortions and dangers to global financial markets.
At a briefing for journalists at the National Press Club sponsored by the Automotive Trade Policy Council (ATPC), whose members include Chrysler LLC, Ford Motor Company and General Motors Corporation, the Chief Economists detailed how the Japanese government has kept the yen undervalued by as much as 30%, the impact that this policy has had on the global economy and on U.S. automakers, and urgent actions that need to be taken to change Japan weak yen policy.
General Motors Chief Economist Mustafa Mohatarem stated, Japan is the second largest economy in the world. It claims to have a market-determined currency. But this is simply not true. He continued, Maintaining an artificially weak yen has been a central, consistent component of Japanese economic policy for more than a decade. First, since 2002, the Japanese government has spent over $400 billion in direct interventions in foreign exchange markets to keep the Yen undervalued. Then the Japanese government engaged in persistent jawboning and threats to the market to ward off any movement to strengthen the yen. Finally, Japan has pursued an ultra low interest rate policy, which has fueled the dangerous carry trade and maintained pressure keeping the yen low.
Ford Chief Economist Ellen Hughes-Cromwick discussed the impact of the misaligned yen on U.S. automakers. The artificially weak yen provides a significant advantage to Japanese automakers to the tune of $4000 to $12,000 per automobile and is the one competitiveness issue that is outside the control of our companies. By providing this unearned windfall for Japanese automakers, the artificially weak yen is driving a major export push out of Japan. In fact, last year, Japan exported more than two million automobiles to the U.S. market, while sales of vehicles produced in their U.S. plants declined.
Chrysler Chief Economist Van Jolissant urged the U.S. government and international community to take action. In June, the International Monetary Fund (IMF) made a major policy decision that targeted the practice of using exchange rates to gain an unfair competitive advantage. It agreed to increase its reporting to the Board and the world community on countries that are clearly using their currencies as a trade policy to boost their exports. The U.S. Treasury, the G-7 and the IMF now should urgently, jointly insist that the Japanese government end this practice of managing a misaligned currency and allow the yen to strengthen to the level that accurately reflects the performance of the Japanese economy.
ATPC President Stephen Collins reiterated that the U.S. government has a responsibility to take the lead on this important issue. €The President and the Secretary of the Treasury should make it abundantly clear to the new Japanese government that the U.S. will oppose any effort by their government to intervene, either directly or indirectly, in foreign exchange markets for the purpose of either weakening the yen or preventing the yen from strengthening.€
|
