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Pastimes : Ask Mohan about the Market

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To: Cynic 2005 who wrote (6837)	11/2/1997 8:23:00 PM
From: tekgk	Read Replies (1) of 18056

>> Last week $ was not particularly strong against the Yen. The dollar was down 2+% across the board in Europe on Monday with no recovery so far. The Yen/Dollar seems reasonably steady so far. Over time the Japanese will be forced diversify their reserves - the real impact will be felt about 3-4 months from now IMHO. >> But I think that if the dollar weakens 6% of more against the Yen, >> this could bring an avalanche of selling in treasuries and the >> liquidity problems could worsen sending the markets in to tail-spin While this is entirely possible I don't think that it will happen in the near term. The underlying weakness of the Japanese economy should forestall any large scale appreciation of the Yen against the dollar for at least the next three to four months. >> Your logic that $ can be dumped in favor of Euro sounds >> plausible. But, aren't we a bit far away for that? Six months for phase one (fixing exchange rates for those countries that make the requirements) is not all that far away - remember that markets anticipate. I should also be more exact - I didn't mean to imply that the dollar would be dumped in favor of the Euro, only that the Euro would capture about 15-20% of the worlds transactions and reserves (which is about 3/4 of Europe's percentage of the worlds GDP) >> Once again, a great post and thanks for sharing your wisdom with us. It's your thread - I enjoyed the thoughtful discussion that has resulted for it. Thanks.

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