BANK OF JAPAN SATISFIED WITH YEN AT CURRENT RANGE
  The Bank of Japan is satisfied with the
  yen around its current range, a senior central bank official
  told reporters.
      He said the pledge by major industrial nations in Paris
  last month to cooperate to hold exchange rates around current
  ranges applied in both directions, a dollar fall or a dollar
  rise.
      Unilateral intervention itself cannot ensure currency
  stability, but it can be useful when coordinated with other
  policies and with other central banks, he said.
      The Bank of Japan is rather confident currency stability
  will continue for some time, the senior bank official said, but
  declined to be more specific.
      Finance Minister Kiichi Miyazawa told parliament on Friday
  the current dollar/yen exchange rate is not necessarily
  satisfactory for the Japanese economy.
      Asked what factors might destabilize the markets, the
  official cited a lessening of market fear about intervention, a
  completely unexpected change in the economy of Japan, the U.S.
  Or West Germany, or resumption of comments by government
  officials seeking to talk the dollar up or down.
      The senior bank official said he expects Japan's gross
  national product (GNP) to grow three pct or slightly more in
  the fiscal year beginning in April. That would be little
  changed from the performance expected this year.
      Domestic demand may grow nearly four pct in 1987/88, but
  the external sector will have a negative impact on GNP of
  nearly one percentage point, he said.
      He said there was virtually no room for further monetary
  policy action to boost the economy. The economy's performance
  in the future very much depends on fiscal policy, he added.
      The central bank's monetary policy has already done its
  part in stimulating the economy, the senior bank official said.
  The Bank of Japan has cut its discount rate five times over the
  last year and a half.
      Although the central bank does not see any imminent risk of
  inflation, there could be some problems in the future, he said.
  "We are sitting on a barrel of powder, but fortunately it may
  still be wet," he added.
      Liquidity among private households and especially the
  corporate sector has increased substantially, he said.
      The liquidity is the reason for the recent boom of stock
  exchange prices, the bank official said. This inflow of funds
  into the stock exchange, occurring also in other countries, may
  continue, he said.
  

