YEN MAY RISE TO 140 TO THE DLR, NIKKEIREN SAYS The yen could rise to 140 yen to the dollar, a leading Japanese businessman said. Bumpei Otsuki, president of the influential Japan Federation of Employers' Associations, (Nikkeiren), told reporters: "The yen might rise as far as 140 (to the dollar). The U.S. Economy is not good, and as long as the U.S. Economy is not good, the U.S. Will put various pressures (on Japan)." "The yen's level depends on the condition of the U.S. Economy rather than Japan's economy, and as long as the American situation is bad, the yen will continue to rise," he said. To cope with the negative impact of the strong yen, Japanese enterprises must strive to cut costs by all means, including holding down wages as much as possible, Otsuki said. He rejected recent calls from some government quarters for wage increases this year as a means of raising private consumption and thus boosting domestic demand. "We have to keep wages as low as possible," he said. He also said the yen's large and rapid rise is depressing the outlook for the Japanese economy, noting that in addition to hurting exporters it is also damaging domestic market manufacturers through cheap imports. Parts of the service sector are also threatened, Otsuki said. Tertiary industries provide services to manufacturers and a downturn in manufacturing profits will adversely affect service industries, he said. It is also doubtful whether the tertiary sector can fully employ those put out of work in the manufacturing sector, he said. Profits of service sector companies are likely to fall in the business year ending in March 1988, leading to a possible recession in the Japanese economy, he said. Otsuki said economic growth is unlikely to pick up beyond levels experienced in 1986. The government's Economic Planning Agency said last week the economy grew at 2.5 pct in 1986, the worst performance since 1974 when the economy shrank 1.4 pct due to the first oil price crisis. In order to stimulate domestic demand and boost the economy, tax reforms aimed at bringing down the cost of land and reforming the nation's housing stock are needed, along with steps to bring down the high cost of commodities, he said.