US President George W Bush has kicked off a six-country tour of Asia holding talks in Tokyo with Japan's Prime Minister Junichiro Koizumi.
Mr Bush, who has spoken warmly of his friendship with Mr Koizumi, was expected to raise US concerns about the value of the Japanese Yen and its impact on US exports.
- [BBC News | World | UK Edition]
Can Bush End Asia's Escalating Currency War?
by William Pesek Jr.
Oct. 16 (Bloomberg) -- U.S. President George W. Bush arrives in Asia tomorrow to discuss trade, the war on terrorism and Iraq reconstruction. Another issue will dominate his time, and the headlines: currencies.
It's rare indeed for heads of state to discuss exchange rates, let alone have them eclipse other pressing issues. But that's the rhetorical and policy tempest into which Bush steps as he arrives here in Tokyo tomorrow.
Bush's team bears some blame. His finance minister, John Snow, who's been calling on China to let the yuan float freely, started the latest currency tussle. U.S. manufacturers, who've shed 2.5 million jobs on Bush's watch, say China uses a currency peg to the dollar to gain an unfair trade advantage.
The good news is that the U.S. is shifting its focus in a more logical direction: Japan. It's here Bush could help end Asia's escalating currency war, whereby neighbors try to outdo one another in making their economies more competitive through low exchange rates.
I suppose it's inevitable: despite the Bank of Japan spending about $123 BILLION trying to keep the yen weak, this sort of high-level pressure has got to force them it allow the yen to get stronger against the dollar. From a purely selfish view, it's good for me.
I really hadn't been paying much attention to the exchange rate itself, but tonight I looked up the change since August, and the value of the yen has gone up about 10% since then, from 120.6 to 109.9. In other words, at the beginning of August ¥10,000 would have bought $83 worth of American goods: now, it'll buy $91 worth.
Considering how much of my disposable income goes Stateside, either for goods like books and DVDs or into my savings account, the exchange rate change is an effective pay raise for me.
I'm going to San Francisco for a week next month, so I wonder how much more my money will stretch by then.