LONDON -- An article by Haruhiko Kuroda, vice finance minister for international affairs, appeared in the Financial Times on Jan. 23 under the headline "The yen's fundamental weakness." Perhaps it should have been titled "the fundamental weaknesses of the Japanese economy."

Kuroda argued that the yen's fall had been market driven and was not engineered by the Japanese government, as has been alleged by some American and Asian leaders. I do not know whether signals may have been given by some Japanese officials that the Japanese authorities would welcome a weaker yen, but it cannot be denied that the yen's weakness reflects real problems in the Japanese economy. Even if the Japanese government had tried to talk the yen down, it is most unlikely that this could have done more than nudge market forces. Interventions by governments or central banks in foreign exchange markets, even if they are on a massive scale, will not succeed in the long run if they are out of line with fundamentals and with market forces.

It has been argued that the Japanese authorities welcome a weaker yen because it will lead to higher import prices, thus reducing deflationary pressures. This will not necessarily be the case. Importers may, at least for a time, be willing and able to absorb the increased costs in order to retain market share. Certainly the impact on deflationary pressures will be marginal and will take time.