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Traders Press for Action on Yen

September 27, 1999

WASHINGTON (AP) _ Currency traders put pressure on the world’s financial leaders Monday to respond to the yen’s sharp rise and protect Japan’s fragile economic recovery.

And at the annual meeting of the International Monetary Fund, financial ministers and central bank governors took time out from squabbling over Japan’s monetary policy to hear comments on the global economy from Alan Greenspan, chairman of the U.S. Federal Reserve.

Greenspan participated in weekend meetings of finance ministers and central bank governors from the United States and other G-7 countries during which they said they shared Japan’s worries about the impact of the yen’s appreciation.

The dollar was higher against the yen Monday in Europe, holding on to its earlier gains in Asia, as currency dealers digested statements made over the weekend by Bank of Japan and the G-7. But analysts said if Japan doesn’t follow its statements with action, the yen could resume its climb.

The yen has strengthened by about 15 percent against the dollar since early July, trading at 106.31 Monday in Europe compared to 104.21 in New York late Friday.

Japanese officials and businesses fear the yen’s climb will make the country’s exports more expensive as the economy begins to pull out of recession. This could help set off inflation in the United States and prompt the Federal Reserve to raise interest rates.

Speaking Monday to the World Bank’s Development Committee, which groups many emerging market countries, Treasury Secretary Lawrence Summers said the IMF and the World Bank should work more closely to fight global poverty.

He also renewed the U.S. demand for stronger anti-corruption safeguards in the institutions’ aid packages.

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