Yen move hits Taiwan, Singapore dollars


The Japanese currency has been on a three-month slide against the dollar, a drop that is now making its way through Asia

By staff and wire reports

TOKYO, Japan -- The yen's weakening run continued on Thursday, with the currency hitting 132.00 against the dollar.

It set that new three-year mark in Asian trade on Thursday afternoon.

Economics Minister Heizo Takenaka spurred yen selling when he again suggested Japanese officials are warm to a weaker currency.

"Basically, the yen rate is not misaligned with economic fundamentals," Takenaka said at a news conference.

Virtually each new day sets a new mark for the yen, which started the day at 131 to the dollar.

Its decline on Thursday was sparked by weak industrial production figures for November. They showed a worse-than-expected 1.8 percent drop over the prior month.

But the yen has been on a three-month run. Its drop in value is likely to boost Japanese trade, by making exports cheaper.

And it has been heaping pressure on other Asian currencies, and Asian competitors of Japanese companies.

Japanese goods see 15% sale

This year alone, Japanese products are 15 percent cheaper, purely as a result of the yen's decline. It was trading at 114.45 to the dollar at the start of 2001.

To compound that move, Japanese prices have been falling with deflation.

In that headwind, the Singapore dollar has been struggling. It stood at 1.85 to the greenback late Thursday afternoon, local time.

Earlier in the day, it hit 1.853, a level it last hit in July 1990.

The city-state's economy relies on exports, particularly of technology and electronics. Its companies were already struggling through a sharp recession, and now have to contend with increased pressure from Japanese competitors.

Korea likely to suffer the most

South Korean companies are likely to suffer most directly. Of Asia's biggest economies, South Korea and China send the most products to Japan. But China has stronger domestic demand.

Korean makers of cars, electronics, steel and ships go head-to-head with Japanese companies. Exporters in those industries have been dropping their profit forecasts for 2002.

Korea's oil refiners - which pay bills in dollars - and airlines are also suffering as they try to adjust.

That has led to speculation that the Korean government will fight to kept the won-yen exchange rate above 10 to 1.

The won, which had been strengthening on the back of a fiery stock market rally since September, fell to 1,329 on Thursday. That's its weakest level since this April.

An official at South Korea's Finance Ministry said Thursday that the government doesn't have a particular target for the Korean won, Dow Jones news service reported.

There has been criticism from official sources in both South Korea and China over the hands-off attitude of Japanese officials. A series of comments from the finance ministry has been seen as encouraging the yen's run.

But the yen's moves have affected most Asian currencies.

The Taiwan dollar set a weak level for 2001 last week, at 35.30 against the dollar. It was trading at 35.08 late on Thursday afternoon.

The Thai baht, Philippine peso and Indonesian rupiah have all weakened as well.

Reuters contributed to this report.