Yen's Continuous Depreciation Will Trigger off New Asian Financial Crisis: Econo

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Last updated at: (Beijing Time) Friday, January 04, 2002

Yen's Continuous Depreciation Will Trigger off New Asian Financial Crisis: Econo

Continuous depreciation of Japanese yen will destabilize Asian currencies and trigger off a new round of Asian financial crisis, Singapore well-known economist John Wong said in an interview with Xinhua Thursday.

As Japan is the second largest economy in the world and yen isone of the major world currencies beside the U.S. dollar and the euro, a significantly weaker yen will definitely bring about serious damages on the rest of East Asia with the Malaysian Ringgit and Hong Kong dollar, which are pegged to the U.S. dollar,bearing the brunt and the Chinese RMB being also vulnerable, said Wong.

Although south Korean yen, and Singapore dollar are not peggedwith the U.S. dollar, he added, they also can not be immunized from the negative consequences of yen's depreciation which is sureto aggravate financial uncertainty in the region and erode or derail the regional efforts for restoring financial stability, he added.

Wong warned that yen's collapse will intensify export competition among Asian economies and a round of competitive currency depreciation could erupt across Asia as export-dependent economies adjust to a rapidly weakening Japanese yen and try to offset the impact of the global economic slowdown, Wong elaborated.

Japan is the major trade and investment partner of Southeast Asian countries, he said, yen's weakening is sure to greatly reduce the competitiveness of Southeast Asian economies, especially those that are close to Japan in development level and have similar export categories with Japan, according to Wong.

On the impact of yen's weakening to the world economy, Wong pointed out that it will eventually make a notable impact on the U.S. dollar and euro, leading to hike of U.S. import of Japanese products and to expansion of U.S. trade deficit, both of which are harmful to U.S. economic recovery.

To ensure economic stability in the region as well as in the world, Wong stressed that Japan should shoulder its responsibilitycorresponding to its position as the world's second largest economy.

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