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U.S. Automakers Say Recent Report by Global Economists Confirms Urgent Need to Strengthen the Yen to Reduce Risk of Global Recession


March 2007
 Filed under: AUTOMOTIVE INDUSTRY TRENDS Car News | AUTOMOTIVE INDUSTRY TRENDS Headlines
WASHINGTON, March 27 /PRNewswire-USNewswire/ -- A new report by 30 leading economists calling for an increase of 25-30 percent in the value of the yen to the dollar is "a timely and urgent reminder to US policymakers about the dangers to the US and global economy if action is not taken to address the extreme and dangerous misalignment of the dollar with major Asian currencies, particularly Japan's," said Stephen Collins, president of the Automotive Trade Policy Council, a trade association representing General Motors, Ford and DaimlerChrysler Corp.

The report echoes calls by U.S-based automotive manufacturers DaimlerChrysler, Ford and General Motors to correct the artificially low yen, which is providing the average imported Japanese car a $4,000 windfall cost advantage over U.S. automakers and other competitors in the U.S. market -- a windfall that ranges up to $10,000 per vehicle for higher end Japanese imported SUVs such as those sold by Toyota under the Lexus brand.
The Washington, DC-based Peterson Institute for International Economics report, entitled "Global Imbalances: Time for Action," calls for strengthening the Japanese yen among other necessary measures to avoid a potentially chaotic adjustment to today's imbalances in current account positions. The report identified "large and unsustainable imbalances in current account practices" as one of the principal dangers facing the world economy today and calls on policymakers "to reduce the risks of a crisis that could produce a world recession."

"This report should be a call to action for U.S. policymakers," said Collins. "The report states that reducing imbalances will require the Japanese yen to appreciate between 25-30% against the dollar. This means adjusting the yen/dollar exchange rate from the current level of about 118 yen/dollar to 90 yen/dollar, which is entirely consistent with our companies' estimates and a point we have been making with US policymakers. In addition, the report confirms what we've been saying all along -- that on a real effective basis, the yen is currently at its lowest level since l986."

A copy of the Peterson Institute report can be found at:
http://www.petersoninstitute.org/

The Automotive Trade Policy Council, Inc. (ATPC) is a Washington, D.C.-based non profit trade association that represents the common international economic, trade and investment interests of its member companies: DaimlerChrysler Corporation, Ford Motor Company and General Motors Corporation.

Source: Automotive Trade Policy Council, Inc.

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