la Defease ofn
Contrary lo recent press reports that Japan's actions have been purposely designed to undervalue ihe yen. Tokyo's short run policy is designednhibit yen depreciation. Defending (he yen is consistent with Tokyo's primary economic goals of maintaining tow inflation, encouraging domestic demand, and alleviating trade pressure. Unlike the, official intervention in foreign exchange markets has been modest, indicating authorities are smwihingoutday-to-day fluctuations and not holding the yen at any particular peg
So far this year. Bank of Japan intervention has been in support of Ihe yen. In fact, Bank officials had hoped to lower tbc official discount rale5 percent to stimulate domestic activity but are holding off in the beliefove would lead to further depreciation unless L'S interest rates also fall. Tbc finance Ministry also is asking Japanese insurance companies to delay foreign portfolio investments in order to slow the outflow of dollar* Sevenanuar> theercent against theOriginal document.