CURRENCY MOVES MAY BE HURTING WORLD TRADE Japanese trade figures are seriously challenging the entrenched view of policy makers of the Group of Seven industrialised nations that relative currency rates are the key to smoothing world trade problems. Senior Japanese, U.S. And European officials in Tokyo say they are at a loss to fully explain the data, for if currencies are the key they ask, why then are are U.S. Exports to Japan shrinking? What if manipulating currencies and driving the dollar down made world trade problems worse rather than solving them, fulfilling Federal Reserve chairman Paul Volcker's forecast of world trade recession? U.S.-Japan trade has declined even after a 40 pct dollar fall against the yen since the September 1985 Group of Five pact in New York. The lower dollar ought to have made U.S. Exports 40 pct more competitive in Japan. The officials, most of them economists, can offer no objective reason why they are not. Worse, how are European Community sales to Japan rising rapidly when the European Currency Unit has until now declined only 11 pct against the yen.? Last week's G-7 meeting in Washington has been widely interpreted as a sign from the policy makers that the dollar must go lower. So worst of all, what if Volcker is correct? At a loss to give an objective explanation, officials can only offer explanations which tend to be highly subjective. "I don't know and I don't think anyone knows," said Hugh Richardson, acting head of the EC delegation in Tokyo. "What I do know is that Community exporters are making a hell of an effort in this market. If you make an effort, there is money to be made in Japan," he added. But U.S. Officials and businessmen are convinced low U.S. Exports to Japan are Japan's fault. They cite restrictive trade practices, protected Japanese trade sectors, such as agriculture, and non-tariff barriers, such as unreasonable checking and customs procedures for car imports. Publicly, Japanese officials remain conciliatory in the face of what they see as U.S. Aggression. In private, they blame U.S. Industry for being uncompetitive. "We see it that way, but we don't like to seem arrogant," said a senior official, who declined to be named. "We like to refrain from accusing them of not making enough effort." Industrialists such as Eishiro Saito, chairman of the Keidanren business group, and Sony Corp chairman Akio Morita repeatedly accuse foreign firms of not making enough effort to understand Japan's markets, and some foreigners agree. "The real issue is the inability of major sectors of American and European industry to compete not only internationally but even in their home markets," Peter Huggler, President of Interallianz Bank Zurich, told a recent conference in Switzerland. REUTER...^M