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reserves had risen from $5 billion at the end of 1970
to $7 billion now. He recognised that the tempo of this
growth was abnormal but he considered that the actual
amount was not enormous if compared with the
porresponding figures in, for example, France, Italy
and West Germany.
Even if the Yen was undervalued the Japanese
Government was not ready to take action. In the light
of the British and German experience it was clear that
unless other measures were taken at the same time
revaluation would not be effective. Thus one and a
half years after the Deutschmark had been revalued the
same problem had now recurred.
If Japan were to revalue the Yen this would have
undesirable effects on her relations with developing
countries especially those in South-East Asia, to
which Japan had granted long-term credits.
Moreover,
if the United States maintained her present economic
policies, the revaluation of other currencies might
not be effective for more than a limited period.
Mr Aichi had welcomed an assurance given by
Mr Rogers at Paris that the US was paying attention
to the world-wide monetary system.
Mr Bottomley said that we accepted that
revaluation was not thepolicy of the Japanese Government.
Although we did not think that the problem could be
solved in any other way it would be improper for us to
press for this. He distinguished two aspects. He
wondered how far the measures on liberalisation which
Japan had already begun would succeed in ameliorating
the situation. He also wondered how Japan viewed
the proposals before the International Monetary Fund
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