It is time to repay JapanWith the world closely watching, Japan continues with its frantic battle to repair the tsunami-damaged nuclear reactors in the Fukushima Prefecture and prevent a catastrophic radiation release. The contaminated reactor complex has now turned into something of a war zone.
Japanese Self-Defense Forces and police personnel, as well as engineers and firefighters, are putting their lives on the line under threat of additional explosions and meltdowns. Their valiant sacrifices and endeavors have moved the Japanese people, who have been stricken with the worst crisis since World War II.
Japan has been struck by one disaster after another. The earthquake and tsunami that wiped out stretches of its northeastern coastline and crippled a nuclear complex and the national power supply will have critical economic repercussions around the world. The imperative threat is the runaway value of the yen. The U.S. dollar at one time slipped to 76.25 yen, the lowest level since World War II.
In general, a crisis-hit currency should weaken. But it is a different case with the yen. As Japanese repatriate wealth to fund a recovery - the theory goes - speculators stock up on yen on the expectation that the currency will rise and they will make a quick profit.
But a strong yen could slow Japan’s efforts to recover by dealing a heavy blow to its exporters, whose industrial activities have already been hurt by the earthquake. If the world’s third largest economy is shaken, so too is the fragile global economy. Japan’s central bank has been fighting a lonely battle against the yen’s runaway value, but recently seven leading global economies agreed to coordinate efforts to stabilize the yen.
Japan Inc. will face many more difficult challenges as it rebuilds its damaged infrastructure. The country’s fiscal debt is already the world’s highest and the cost for reconstruction will likely worsen its debt problems. Japan helped South Korea during many difficult times in the past. It extended $4 billion as part of an economic cooperation fund to help us shake off economic troubles in 1983. The $30 billion currency swap between the two countries helped strengthen our resilience against the global economic crisis in 2008. It is our time to lend them a hand.
We are not a G-7 nation yet, but we have one of the world’s largest foreign reserves of $300 billion. We can help stabilize the yen by selling our yen-denominated assets. Japan is a proud country. We must seek out creative and quiet ways to help our neighbor.