Report: Japan May Sell U.S. Bonds
Dec. 07, 1997
TOKYO (AP) _ Japan's governing party plans to look into selling some of the government's holdings of U.S. Treasury bonds to help Japanese banks that are having trouble obtaining dollars, media reports said Sunday.
Concerns about their financial health have made it harder for Japanese banks to raise funds in overseas markets.
Nikkei News and Kyodo News agency quoted officials of the Liberal Democratic Party, including Taku Yamasaki, chairman of its policy affairs research council, as saying dollars raised by selling Treasury bonds could be deposited at Japanese banks.
A substantial amount of Japan's foreign reserves, which stood at $228 billion at the end of November, are invested in U.S. Treasury bonds.
Yamasaki noted that casual comments by Prime Minister Ryutaro Hashimoto earlier this year about Japan selling U.S. Treasury bonds had pushed the dollar down steeply against the yen.
But Kyodo quoted Yamasaki as saying that because of the dollar's recent strength, selling some of bonds would have little impact on dollar-yen exchange rates.
The dollar is at 5 1/2-year highs against the yen, and climbed as high as 130 yen on Friday.
Both Nikkei and Kyodo quoted Yamasaki as saying, ``I think an exchange rate of 120 yen to the dollar is an appropriate level.''
The reports said the Liberal Democrats are likely to include U.S. bond sales in a package of policy proposals later this month to aid the financial system.
Japanese banks have been burdened with large amounts of bad loans stemming from the collapse of the ``bubble'' of high stock and land prices from the late 1980s, when easy credit encouraged a wave of speculation.
Four major financial companies, including Yamaichi Securities Co., one of Japan's largest brokerages, have failed in the last month.