Recently the Japan Auto Manufacturers Association (JAMA) made a plea to the Japanese government to intervene in foreign exchange markets to weaken the yen.

Why should you care? A weaker yen could tend to make cars and truck built in Japan cheaper in America. A strong yen makes it more difficult for Japanese manufacturers to compete.

At a press conference, Toshiyuki Shiga, JAMA’s president and chief operating officer of Nissan, said, “If the yen’s strength continues, there will be a negative impact on Japan’s economy. If there are any steps [the government could take], then we would like to ask.”

Unlike in the United States, many foreign automakers and their trade associations frequently ask their governments to wade into the currency markets in an effort to make their products more competitive in other countries. The American Automotive Policy Council (AAPC,) which represents Chrysler Group LLC, Ford Motor Co. and General Motors Corp., says it strongly objects to JAMA’s action.

“We believe that governments should refrain from intervention in the foreign exchange markets and public statements aimed at influencing currency exchange rate levels,” said AAPC President Stephen Collins. “In a highly integrated and competitive global economy, everyone has to play by the same rules -- no intervention, no gimmicks that would give exporters in one country an unfair leg up on their global competitors. Market-determined currency exchange rates are a fundamental prerequisite for free trade.”

The AAPC claims the Japanese government has a long history of intervening into foreign currency markets to boost exports and discourage imports at the expense of jobs and production in other markets.

 

 

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