Lowering Dollar Won’t Cut Deficit--Japan Official

Pushing the dollar lower against the Japanese yen to help shrink the U.S. trade deficit could have the opposite effect in the long term as Japanese businesses become more competitive, a senior Finance Ministry official said Tuesday.

Makoto Utsumi, director general of the Finance Ministry’s International Finance Bureau, also said U.S. businesses were fully competitive at current exchange rates even though they had problems competing in foreign arenas.

“A further decline in the dollar would not reduce the Japanese trade surplus,” Utsumi told reporters at the Foreign Correspondents Club of Japan.

“If the dollar weakens further, Japanese businesses would take steps to survive by further rationalization of business and manufacturing, keeping wage increases low, cutting labor further--economy in every aspect,” the director general said.