Wall Street analysts are pessimistic about the Japanese Government's will to correct the yen's fall, and they predict it will continue to slide. On Friday, it took 144.22 yen to buy a US dollar, 3 per cent off on the previous week. Since its peak in 1995, the yen has plunged almost 45 per cent against the dollar. A weaker yen makes Japanese products cheaper and more competitive, causing further damage to the economies of Japan's neighbours and a relentless spiral of currency devaluation. There is growing concern about the destabilising effect on markets around the world. The impact on the United States has been mixed, with consumers benefiting from cheap imports and low interest rates partly made possible by the Asian slowdown. However, US corporate profits have dropped, and 20 companies last week issued warnings that the Asian downturn would hit profits. There are also fears that the continued weakness of the yen could trigger financial panic in Asia that could spread to the US. Wall Street analysts criticised Tokyo's failure to arrest the decline. Chase Manhattan currency strategist Karen Parker warned there was no limit on where the dollar could go against the yen. Lehman Brothers chief economist Stephen Slifer said he could not see any upside to the dilemma until Japan tackled bank debt. He said he was concerned about the 'depression mentality' that had overtaken the Japanese business and commercial sector. 'Asian investors are demonstrating their concern about the lack of attention being given to the banking problems. There is widespread worry that the Bank of Japan and the government have not done enough. 'The domestic economy shows no signs of turning around and investors are keeping assets in other places.' Mr Slifer said he could not see a bottom level for the yen. 'In order to get to the bottom it is going to get worse. It may have to scare the pants off the Japanese people before they give the politicians the support they need to deal with the bad loans. 'It is a serious problem, and I don't think Japanese politicians realise this.' Merrill Lynch economist Ron Bevacqua believed the authorities needed to be more aggressive on problems in the banking sector. 'If the changes are meaningful enough to restore confidence in the economy and Japanese macroeconomic policy, it would also be positive news for the yen.' Merrill Lynch also saw the dollar gaining strength against the embattled yen. Vice-president Walter Murphy said: 'If continued strength allows the dollar to rally through 142, subsequent resistance may not come into play until at least 148-150, perhaps higher.' Morgan Stanley Dean Witter economist Stephen Roach said the weak yen put the global economy on a dangerous path. 'It lessens the urgency for corporate Japan to restructure and facilitates a beggar-thy-neighbour trade policy that puts Japan on a geopolitical course with the rest of the world,' Mr Roach said. 'It also heightens the risk of another lethal round of currency contagion, making investors particularly fearful that China may rethink its current policy.'