From Mr Blair Baker.

Sir, I agree wholeheartedly with Gillian Tett's comments regarding Bank of Japan's Brobdingnagian task in terminating its near-zero per cent interest rate policy ("Public relations battle ahead for central bank", April 26). Might I go one step further and suggest that the BoJ retain the services of that noted Frankfurt public relations firm, Duisenberg, Eichel, Welteke, Noyer, and Associates to devise their game-plan?

The recent remarks by Masaru Hayami, governor of the BoJ, concerning the inevitable monetary tightening amount to well-scripted trial balloons floated to gauge the markets' reactions - the "public relations and market management" Ms Tett describes. Mr Hayami's words precipitated a short-lived appreciation of the yen, invariably a boon to the Ministry of Finance and BoJ policy makers who must prevent volatility ahead of the election and the Okinawa G7 summit.

In an ideal scenario, the government and central bank would see eye-to-eye on all policy fronts; Bank of Japan would epitomise central bank transparency; and one cohesive voice would delineate monetary policy to the Tokyo markets. This is not going to happen, and even were it possible, shortcomings in the euro-zone would continue to complicate matters.

Consider the facts: the euro has depreciated more than 20 per cent and 28 per cent vis a` vis the dollar and yen respectively. The euro-zone is a major exporter of capital, much to the delight of US equity markets and beneficiaries of direct foreign investment. A chorus of financial and monetary officials in the euro-zone has verbally intervened to support the single currency, perhaps in concert with European Central Bank's "benign neglect" policy.

Japanese life insurers and financial institutions, major holders of euro-denominated securities, continue to liquidate these assets to stop the bloodbath, creating fresh incentive for yen bulls to stampede. Market psychology en masse will continue to ignore the positive economic data in the euro-zone. Pundits suggest that a massive euro-buying intervention could be fruitless and set the single currency back more. ECB officials can jawbone about internal price stability until they are blue in the face - but why perpetuate the public relations disaster that is their external euro policy?

The BoJ's hands are tied. Resilient US share prices continue to plague the single currency which in turn keeps the prospect of yen volatility very much alive. Kiichi Miyazawa, the finance minister, thinks he had headaches before the G7, compliments of the central bank? Mr Hayami is powerless, and at the mercy of ECB's policy gone wrong. Ever see a central bank chase its tail?

Blair Baker, Foreign Exchange Strategist, Global Capital Investment, LLC, 67 Wall Street, Suite 2211, New York, NY 10005, US