Japan cries 'Uncle!' as high US interest rates hurt the yen

Japan is adding its voice to those of Western European nations citing damage to allied economies from high interest rates in the United States. Those soaring rates tug the value of the dollar upward and, like a seesaw, depress the value of other major currencies, including the yen.

Japan's money has lost 15 percent of its value against the dollar since the beginning of 1981. Some European monies have lost from 25 to 30 percent. This has manifold effects, including a sharp increase in the price of oil that Japan and Europe import, because oil moving in world trade is priced in dollars.

Meanwhile, in the wake of President Reagan's tax and budget victories and his expressed determination to support a tight monetary policy, the dollar continues to shoulder its way up in world money marts. As a result, investors rush to the US dollar to earn record-high interest on their deposits.

This sucks capital out of Western Europe and Japan, which the home economies urgently need to break out of recession or speed economic growth. Foreign central banks feel the need to pump up their own interest rates to slow the flight of capital. Some central banks "intervene" by buying up dollars to stabilize exchange rates.

Japan's problem is less acute than that of Britain, France, Italy, and some other European lands, where inflation and unemployment are sharply higher. High US interest rates, forcing up rates in Europe, make it hard for businessmen to borrow. Bankruptcies are up and joblessness, especially among young Europeans, is a deep concern.

Ironically, a strong dollar helps other nations in the trade field and hurts the US. Because the French franc, for example, has dropped about 25 percent against the dollar this year, an American product costs a French importer 25 percent more to buy. He buys less, while American importers -- finding French goods 25 percent cheaper in dollar terms -- buy more. Multiplied worldwide, this threatens to widen the US trade deficit this year.

The US trade deficit with Japan, for instance, widened during the first quarter of 1981 and US Commerce Secretary Malcolm Baldrige forecasts a possibly record US trade shortfall with Japan for 1981 as a wh ole.