Bloomberg News

Yen’s Four Decade Climb Versus Dollar Over, Ex-MOF’s Utsumi Says

March 01, 2013

The yen’s protracted climb against the dollar over the past four decades is over, said Makoto Utsumi, a former top Japanese currency official.

The yen gained more than 370 percent from August 1971, when U.S. President Richard Nixon took the U.S. off the gold standard and Japan subsequently dropped its currency peg, and its record level of 75.35 per dollar in October 2011. It’s since dropped about 19 percent, accelerating losses after Prime Minister Shinzo Abe’s Liberal Democratic Party came to power in December on pledges to weaken the yen and end deflation.

The long-term direction of the yen is less about Abe than it is about the fall of the Soviet Union, which vastly expanded the population of people connected to the global economy, Utsumi said in an interview yesterday.

“Higher demand made primary commodities more expensive, while increased competition pushed down prices of the final products,” said Utsumi, 78, Japan’s former vice finance minister for international affairs from 1989 to 1991 and now president of Japan Credit Rating Agency Ltd. “Japan is a commodity importer and a product exporter, so its terms of trade got worse and worse.”

By contrast, conditions are improving for the greenback, according to Utsumi. Manufacturing is returning to the U.S. from China, and the emergence of shale oil and gas could make it an energy exporter in a decade, he said.

“The dollar’s strength is its availability, and its hard to imagine its value would suffer a major decline long term,” he said.

To contact the reporters on this story: Kevin Buckland in Tokyo at; Shigeki Nozawa in Tokyo at

To contact the editor responsible for this story: Rocky Swift at

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