The yen could rise to 140 yen to thedollar, a leading Japanese businessman said.
    Bumpei Otsuki, president of the influential Japan
Federation of Employers' Associations, (Nikkeiren), told
reporters: "The yen might rise as far as 140 (to the dollar).
The U.S. Economy is not good, and as long as the U.S. Economy
is not good, the U.S. Will put various pressures (on Japan)."
    "The yen's level depends on the condition of the U.S.
Economy rather than Japan's economy, and as long as the
American situation is bad, the yen will continue to rise," he
said.
    To cope with the negative impact of the strong yen,
Japanese enterprises must strive to cut costs by all means,
including holding down wages as much as possible, Otsuki said.
    He rejected recent calls from some government quarters for
wage increases this year as a means of raising private
consumption and thus boosting domestic demand.
    "We have to keep wages as low as possible," he said.
    He also said the yen's large and rapid rise is depressing
the outlook for the Japanese economy, noting that in addition
to hurting exporters it is also damaging domestic market
manufacturers through cheap imports.
    Parts of the service sector are also threatened, Otsuki
said.
    Tertiary industries provide services to manufacturers and a
downturn in manufacturing profits will adversely affect service
industries, he said.
    It is also doubtful whether the tertiary sector can fully
employ those put out of work in the manufacturing sector, he
said.
    Profits of service sector companies are likely to fall in
the business year ending in March 1988, leading to a possible
recession in the Japanese economy, he said.
    Otsuki said economic growth is unlikely to pick up beyond
levels experienced in 1986.
    The government's Economic Planning Agency said last week
the economy grew at 2.5 pct in 1986, the worst performance
since 1974 when the economy shrank 1.4 pct due to the first oil
price crisis.
    In order to stimulate domestic demand and boost the
economy, tax reforms aimed at bringing down the cost of land
and reforming the nation's housing stock are needed, along with
steps to bring down the high cost of commodities, he said.
 REUTER
