afr.com.au
The regional economist for Nomura in Hong Kong,
Robert Rountree said: "Japan as an engine of growth for
Asia? It's not going to happen." Without any Japanese
impetus, "the rest of Asia is heading for recession, and
quite a nasty recession at that", said the regional
economist for Credit Lyonnais Securities Jim Walker.
"We see negative growth in Thailand, Indonesia,
Malaysia and South Korea, and a substantial slowdown
in China."
''Basically, Japan didn't do anything .... They gave a small tax cut
that's really not going to show up -- except in people's mattresses with $200 more in their pocket,'' said a dealer at a French bank in New York.
''They had a tax increase earlier this year and they took away a small portion of that.''
Korean won trading at 1,618 to the dollar, weakening by 212 won, or 15%. All other SE asian currencies weakening moderately as of 2:05am.
''Everybody is talking about the Toshoku bankruptcy,'' said Vic
Lespinasse, a trading specialist for A.G. Edwards and Co. ''That put pressure on everything on the floor.''
Japan is the largest buyer of U.S. agriculture commodities, taking $10.7 billion worth in fiscal 1997, and traders feared bankruptcies by other grain firms could prompt cancellations of grain that has been sold but not shipped.
But a spot trader at a major Japanese bank said currency intervention
without the right policy mix would merely give market players a good chance to pick up bargains, with heavy buying interest seen from U.S.
funds and Japanese investors below 125 yen.
''In order to kill these buyers, the BOJ would need to sell a bigger amount of dollars than it did on Tuesday,'' he added.
But such action would risk hurting the U.S. Treasury market as well as U.S. stocks because Japan needs to liquidate holdings of U.S. Treasuries for dollar sales.
The BOJ was estimated to have sold more than $3 billion worth of dollars for yen in intervention on Wednesday, the first time it had taken such action since August 1992.
Dealers said Japan's economic and currency measures on Wednesday were mainly designed to help restore market confidence to Japan and other Asian nations whose currencies fell sharply, economies and the financial sector were reeling.
Economic linkage between Asian nations and Japan has deepened both in trade and financial markets, and the yen's fall would deepen currency turmoil in the region.
''The intervention has helped improve sentiment in Asian currencies but it is questionable that they will lead to a restoration of confidence,'' said Mikio Yasutake, manager at Bank of Tokyo-Mitsubishi Ltd. Asian nations have internal problems that should be resolved by
themselves, such as improvements in disclosures in the financial sector |
