yep, i wasn't (g)ing when i said that. -ng- i think that IS what gold is saying.
i see by the spoos that the kiddies are out early today and ready to buy.. HO HO
Top Financial News
Thu, 14 Oct 1999, 6:35am EDT
Yen Little Changed as Investors Await Bank of Japan Money Supply Measures
By Siobhan Almond
Yen Little Changed as Investors Await BOJ Yen Supply Measures
London, Oct. 14 (Bloomberg) -- The yen was little changed
against the dollar as traders and investors awaited clues on how
much the changes to the Bank of Japan's money-market operations
will boost money supply.
The BOJ said yesterday it will buy more government bills and
expand the range of bonds it will buy for later resale.
''People are taking a wait-and-see approach,'' said Uwe
Fuehrer, head of currency sales at Credit Agricole Indosuez. He
said the yen is likely to trade between 105 and 108 per dollar in
the days ahead.
The yen was little changed at 106.96 per dollar from 106.67
at the close of London trading yesterday. It was at 115.32 per
euro, little changed from 114.97 late yesterday. The euro was
little changed near a two-month high against the dollar, at
$1.0781 from $1.0780 yesterday.
The Japanese currency earlier fell as low as 107.40 per
dollar as some traders speculated that the central bank's move
may be enough to persuade its peers to help it in selling yen if
necessary.
In one indication that many traders are refraining from
making big bets on the yen, one-month implied volatility in the
dollar-yen exchange rate is at 13.7 percent, down from 22 percent
Sept 22. Volatility is used to determine the price of options to
sell or buy a currency at a future date.
The bank's decision may be enough to persuade other members
of the Group of Seven industrialized nations that Japan is doing
more to revive its economy, making it more likely they'll sell
yen with Japan if the currency extends this year's climb, some
analysts said.
The central bank's move should ''provide the G-7 with the
necessary prerequisite for concerted central bank intervention,''
said Alex Beuzelin, a market analyst at Ruesch International,
which advises companies on currency risk management. That means
the yen's gains ''will likely be capped.''
Analysts said the bank's move was probably prompted by
pressure from its own government and the G-7 to do more to weaken
the yen and improve economic growth. In a statement after their
September meeting, G-7 officials said Japanese authorities
reiterated their intent to take measures to revive the economy
and wipe out deflation concerns.
''They've tried to appease their critics by doing
something,'' said Sally Wilkinson, senior economist at Daiwa
SBCM. Furthermore, the BOJ ''is concerned about the impact (of
the strong yen) on economic recovery,'' she said.
U.S. Treasury Secretary Lawrence Summers said yesterday that
the U.S. and Japan ''share a common stake in strong, domestic-
demand led growth in Japan.'' He declined to comment on the Bank
of Japan's announcement yesterday.
A strong yen is bad news for Japan's economy because it
makes exports more expensive and cuts the overseas profits of
exporters when converted into yen. A faltering Japanese economy
could drag on world economic growth because it would take in
fewer imports.
The yen rose to a 44-month high of 103.20 on Sept. 15,
bringing its gain in the previous three months to more than 15
percent. It's lost 2.5 percent of its value since then.
The dollar's gain could be short-lived, analysts said, if
U.S. stocks and bonds extend declines today. The Dow Jones
Industrial Average has dropped about 4 percent in the past two
days and the yield on the 30-year bond yesterday rose to a two-
year high of 6.29 percent.
Falling stocks and bonds typically hurt the dollar since
international investors selling those securities convert the
proceeds into other currencies. Furthermore, the prospect of
stocks and bonds dropping further means there's less demand for
dollars needed to purchase them.
''Given the risk of 'triple weakness' in stocks, bonds and
the currency in the U.S., Japanese investors may be more
attracted to euros,'' said Toyomitsu Sakata, the head of treasury
and foreign exchange sales at Commerzbank. He expects the euro to
rise to 118.50 yen and $1.100 in coming weeks.
The euro got support amid expectations the European Central
Bank will lift interest rates in the coming weeks, increasing the
return on euro-denominated deposits. The rate for three-month
euro lending has already risen 24 basis points this month, to
3.36 percent, in anticipation of higher official interest rates.
''We do think that there is a prospect of the euro
strengthening,'' said Rory McLeod, who helps oversee more than
$14 billion at Baring Asset Management.
The ECB's key rate is now 2.5 percent, a record low for the
11 countries that adopted the euro in January.
|
