clarinews@clarinet.com (02/10/90)
WASHINGTON (UPI) -- Bank of Japan Governor Yasushi Mieno was to reaffirm Tokyo's commitment to world exchange market stability in meetings Friday with Federal Reserve Board Chairman Alan Greenspan and Treasury Secretary Nicholas Brady, Japanese sources said. Mieno, who succeeded Satoshi Sumita at the helm of the Japanese central bank Dec. 16, was in Washington for talks on monetary issues, ``including the reaffirmation of the (Group of Seven) coordination to stabilize foreign exchange markets,'' a central bank official said in Tokyo. A Fed official said Mieno was to meet with Brady and Greenspan in the course of what he termed ``a courtesy visit.'' The official added, ``There are not going to be any official discussions or negotiations.'' The Group of Seven leading industrial countries comprises the United States, Japan, West Germany, France, Britain, Italy and Canada. G-7 officials meet at intervals to coordinate economic policies in order to maintain the stability of exchange rates and world financial markets. The group met in Washington in September and agreed to restrain the rise of the U.S. dollar. Since then the West German mark has strengthened a great deal against the dollar, for economic and political reasons, but the Japanese yen has remained relatively weak against the U.S. currency. West Germany and Japan both raised central interest rates late last year but the Japanese hike was smaller and had less effect. The United States and Japan both would like to see the yen strengthen against the dollar, which would help redress the U.S. trade deficit by making Japanese goods more expensive here and U.S. goods cheaper in Japan. Financial analysts were speculating that Mieno and Greenspan might reach some agreement on how to boost the value of the yen. One way would be for the Bank of Japan to carry out a long-awaited hike in its key interest rate, most likely after the parliamentary elections set for Feb. 18. Political uncertainty has sapped yen strength, as the stability of Japanese financial markets is closely tied to the fortunes of the ruling Liberal Democratic Party, damaged by scandals. The government has resisted an interest rate hike, which could hurt its election chances. A financial source said Mieno, a veteran of Japanese domestic policies with little experience in international affairs, wanted to meet his American counterpart and familiarize himself with G-7 procedures. ``He is not so familiar with these small groups, and it would not be good if he joined them without (previously) seeing various persons'' from the G-7, the source said. A Fed spokesman said Mieno met Thursday in New York with E. Gerald Corrigan, president of the Federal Reserve Bank of New York, which has a leading role in executing Fed policies in U.S. financial markets.