EXCHANGE RATES ALMOST WITHIN G-6 LEVELS - SUMITA
Bank of Japan governor Satoshi Sumita
said that current exchange rates are almost within the levels
agreed to by six major nations last month in Paris.
    Asked whether a dollar/yen rate of 148 or 149 reflected
economic fundamentals, he said current rates almost reflect
fundamentals.
    Sumita told reporters major nations have cooperated to
bring about currency stability in line with the Paris
agreement, which stipulated that they would closely cooperate
to that end. He repeated the central bank will intervene if
necessary, adding he did not think a dollar free-fall was
likely.
    But Sumita said he could not say exactly what currency
levels would be considered in line with underlying economic
fundamentals.
    In Paris on February 22, Britain, Canada, France, Japan,
the U.S. And West Germany agreed to cooperate to hold
currencies around their then current levels.
    Sumita said he could not find any specific reasons behind
the fall of the dollar to a record low against the yen
yesterday. But he said the market rushed to sell dollars as it
nervously reacted to statements abroad and to developments
surrounding trade tensions.
    U.S. Treasury Secretary James Baker said over the weekend
that the Paris pact did not encompass fixed tragets for the
dollar. U.S. Trade Representative Clayton Yeutter called
U.S/Japan relations on certain key trade issues very strained.
    The market reacted nervously because the dollar has been
moving narrowly against the yen since mid-January, Sumita said.
He added he does not expect the yen/dollar exchange rate to
remain unstable because the market is concerned about a sharp
rise of the yen.
    The Bank of Japan will keep a close watch on exchange rates
in line with the Paris accord, he added.
 REUTER
