BOJ is run by a bunch of pansies....
Sun, 16 Jul 2000, 10:29pm EDT
Yen Falls After Sakaiya Says BOJ Unlikely to Raise
Rates Today
By Miki Anzai and Mari Murayama
Tokyo, July 17 (Bloomberg) -- The yen fell against the dollar to nearly its weakest
level since June 2 after Japan's Economic Planning Agency chief Taichi Sakaiya
said the Bank of Japan policy board is unlikely to raise interest rates today.
A decision to scrap the zero-rate policy ``isn't likely to take place,'' said Sakaiya,
speaking to a group of reporters at the prime minister's residence. The Bank of
Japan policy board began meeting at 9 a.m., Japan time, to discuss whether to
raise the target overnight interbank lending rate from near zero percent. The
decision will be announced shortly after the meeting ends. The meeting usually
runs until late afternoon.
``Expectations the BOJ will raise rates as soon as today have evaporated'' after
Sakaiya's remarks, said Yasuji Yamanaka, a foreign exchange manager at Nikko
Trust and Banking Co.
The yen weakened to 108.15 per dollar from 107.72 in late New York trading
Friday. It also fell against the euro, dropping to 101.37 from 101.09 in New York.
The Japanese currency earlier rose as high as 107.29 per dollar, its strongest
since Thursday, as speculation heightened the BOJ would boost rates by a
quarter percentage point at today's meeting. Jiji Press reported Richard Medley,
chairman of Medley Global Advisers, predicted the BOJ policy board would vote
5-4 to raise rates.
Of 65 Japanese traders and analysts surveyed by Bloomberg News last week, 21
expect the Bank of Japan to raise its target overnight lending rate today.
BOJ
The yen gained more than 2 percent against the dollar last month as BOJ
Governor Masaru Hayami and two of his deputies hinted the central bank would
lift rates today. The currency then fell as much as 2 percent last week when
Japan's department store, Sogo Co., filed for court protection from creditors.
The failure of Sogo under 1.87 trillion yen ($17.3 billion) of debt triggered calls
from government and business groups for the central bank to leave overnight
rates at zero to help stave off more bankruptcies.
Higher rates would boost the yen by making yen deposits more attractive, while
hurting Japan's debt-laden companies by making borrowing costs more
expensive.
Even if the BOJ raises rates today, the yen won't likely surge above 106 per
dollar, because the Japanese central bank is not expected to keep raising rates
as long as the country's economic recovery is still considered fragile, said
Takashi Toyahara, Nomura Trust and Banking Co. foreign exchange manager.
The impact of the BOJ's rate decision will be limited, said Makoto Hino, a foreign
exchange manager at Toyo Trust & Banking Co. ``The best the yen can rise to is
106 per dollar even with the rate increase, as many investors are waiting to buy
dollars when the currency dips'' to seek higher returns abroad.
Euro
The euro, little changed against the dollar, may rise as Germany approved tax
cuts Friday to spur economic growth and investment in Europe's biggest
economy, which could bolster demand for the regional currency.
Germany's upper house of parliament approved 50 billion deutsche marks ($24
billion) in tax cuts, the final step in a five-year package of reforms that also
scraps taxes of more than 50 percent on asset sales.
The euro recently bought 93.77 U.S. cents, little changed from 93.85 in late New
York trading Friday.
``Given the completion of the German tax reform plan, the euro won't fall below 90
cents,'' said Yoichiro Yamaguchi, a foreign exchange manager at Sakura Bank
Ltd.
In other trading, the dollar rose to 1.6526 Swiss francs from 1.6508 francs in late
New York Friday. The British pound fell to $1.4977 from $1.5006 in New York
Friday. |
