Japan’s Dollar Stance Viewed as Aid to Bush

TOKYO — Japan’s position on the dollar is looking increasingly like an attempt to help President Reagan’s Republican heir, George Bush, win the White House in November’s election, Tokyo economists say.

“Many Japanese feel the Democrats are more threatening as far as protectionism is concerned,” said Bill Sterling of Merrill Lynch, Japan.

“Japanese don’t know what to expect from a Democratic U.S. president. They fear a Democrat spells protectionist trade policies which would be aimed at Japan,” said Keikichi Honda, chief economist at the Bank of Tokyo.

A higher dollar at this time helps head off inflationary pressures within the U.S. economy and thereby allows the Federal Reserve to keep interest rates low. Both factors are popular with the electorate and business.

Speculative Bubble

“This is a political market. The dollar should look strong to ordinary American voters,” said Bank of Tokyo’s Honda.

The Bank of Japan has stood idle in recent weeks while most other central banks, including the Federal Reserve, repeatedly intervened to stem the dollar’s rise.

But that has been largely to stop the dollar’s rise against the West German mark and most economists think that Washington now accepts Bonn’s determination to stop inflation building in its own economy--which it can do by keeping the mark high.

The economists believe that the dollar’s strength against the yen is a timely speculative bubble, which is being reinforced by U.S. and Japanese statements at a politically advantageous time for President Reagan’s Administration.