News Analysis: The Appreciation of Yen May not Be a Good Thing 　　Since the beginning of the new year, the yen's exchange rates have been rising sharply and hit a record high of 110.20 yen to one US dollar yesterday, which was 1.20 yen higher than that of last Friday. 　　The revaluation of the yen is not due to the good prospect of Japan's economy, on the contrary, it is affected by changes in the external economic environment. 　　The first factor of this phenomenon is the adjustment of US financial policy aiming to keep the sustainable development of the US economy. In order to enlarge export and reduce its huge foreign trade deficit, the US government is likely to change its policy of "strong dollar", which allows the dollar to be somewhat sluggish. 　　The second reason is the rise of the long-term interest rate of the yen while the United States cuts its interest rates three times in a short time. The reduction in the gap of interest rates between the US dollar and the yen has lured more investment in the yen. 　　Third, the launch of the Euro puts pressures on the US dollar, which will influence the status of the dollar in the international market. 　　Another reason that cannot be ignored is the buying spree of the yen by international speculative funds. 　　The rise of the yen and Japan's interest rates may offset the effort made by the Japanese government to stimulate its weak economy. The revaluation of the yen will push up the price of Japan's exports and weaken their competitiveness. If the exchange rates of the yen rise 20 percent, the Japanese enterprises will earn 10 trillion yen less profit, according to the Japanese Finance Ministry. 　　The decrease of profits and increase of interest rates will affect the equipment investment and pose more serious side effects on the weak internal need. 　　The appreciation of the yen will also bring negative effects to the Asian nations' economic recovery. 　　 　　 Opinion 1999-01-12 Page7 Full Story in Chinese