The Japanese Finance Ministry again has refused to put restraints on the mammoth outflow of capital into foreign securities, but says it will warn investors of the risks they face.
Securities analysts interviewed here voiced doubt that warnings would have a noticeable effect. Some saw the statement as a painless effort to convince the United States that Japan is trying to do something to slow the outflow, which is blamed for helping strengthen the dollar.
But others called it significant as a public, if cryptic, expression of concern by the powerful ministry about Japan's emergence as one of the world's great exporters of capital. It could function as "moral suasion," it was suggested.
Net outflow for foreign bonds totaled $6.9 billion in June, $8.4 billion in July and an estimated $4 billion in August, according to the Finance Ministry.
Investors here generally are seeking the higher yields available in foreign capital markets. Most of the money is believed to go into U.S. government securities, which pay about 4 percentage points more than Japanese securities.
Many economists feel the flow puts major upward pressure on the dollar by creating demand for it in currency markets. The strong dollar, in turn, is blamed for much of the imbalance in U.S.-Japan trade, which gave Japan a $37 billion surplus last year.
The surplus is continuing to grow. Figures released by the Finance Ministry today show that Japan recorded a $3.5 billion surplus in its overall foreign trade in August, more than three times the amount in August 1984.
Some U.S. officials have called on Japan to rein in the capital outflow in hopes of bringing the dollar down. Japan consistently has refused to do so, however, arguing that it would run counter to long-term programs to deregulate its financial sector.
In the Japanese view, the best solution is for the United States to control the federal budget deficit. This would bring down U.S. interest rates and dampen the attraction of U.S. investments for the Japanese, economists here contend.
Japan is waging a public relations offensive to head off legislation in Congress aimed at hampering the sale of Japanese goods in the United States. This weekend, the respected Japan Economic Journal reported that Prime Minister Yasuhiro Nakasone had told the Finance Ministry to look for ways to cut down the flow.
Officials at the ministry denied that any such request came. Nonetheless, on Monday, its vice minister for international affairs, Tomomitsu Oba, called on Nakasone to say that controls are impossible but his ministry would advise investors to pay close attention to exchange risks, according to ministry officials.
People exchanging yen for dollars to buy U.S. bonds, for instance, lose money if the dollar drops in value between the time they buy the bonds and the time they sell them and convert the proceeds back into yen. By the same token, however, they gain if the dollar rises.
One analyst at a major Japanese securities house dismissed the warnings, saying dealers are already "100 percent aware" of exchange risks. "The risk is what makes them like the work," he said.