JAPAN HAS NO PLANS TO CUT DISCOUNT RATE
  Bank of Japan sources said the bank
  has no plans to cut its discount rate.
      They told reporters that there was no pressure on Japan
  during the Group of Seven (G-7) meeting here yesterday to lower
  its discount rate. They added that they themselves do not feel
  any need for a cut at all.
      Chancellor of the Exchequer Nigel Lawson told reporters
  earlier today that some countries - those with strong
  currencies - might have to cut interest rates.
      The Bank of Japan sources also said that it was too soon to
  call the G-7 pact a failure.
      The central bank sources were commenting on the dollar's
  renewed tumble in New York and Tokyo, which was sparked by
  remarks by U.S. Treasury Secretary James Baker that the
  dollar's fall had been orderly.
      They said the market must have misinterpreted Baker's
  comments because he was referring to the dollar's fall since
  the Plaza agreement in September 1985, over a long-time span,
  not the currency's recent movements.
      They added that the foreign exchange markest seem to seize
  on anything to use as an excuse to drive the dollar one way or
  the other.
      The Bank of Japan sources said the U.S. Is putting more
  weight on the dollar/yen rate in terms of judging market
  stability than on other currencies.
      Throughout the G-7 meeting, Japan pointed to the dangers
  that would arise from a further dollar fall because it would
  reduce the flow of Japanese capital to the U.S., Hurting the
  U.S. And world economies, they said.
      In February and in March of this year, Japanese investors
  reduced their purchases of U.S. Treasury bonds, the sources
  said.
      Each country in the G-7 - Britain, Canada, France, Italy,
  Japan, the U.S. And West Germany - has a different view about
  currency stability, the Bank of Japan sources said.
      This is because the overall foreign exchange market is a
  triangle of dollar/yen, European currencies/yen and
  dollar/European currencies.
      At the time of the Louvre agreement, European countries did
  not want the yen to weaken against their currencies so they did
  not object to the yen strengthening, they said.
  

