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Politics : Idea Of The Day

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To: Raj who wrote (19141)	8/4/1998 8:20:00 AM
From: IQBAL LATIF	Read Replies (1) of 50167

Market did misinterpret Miyazawa comments-- I would think that he wanted to talk tough by saying that Japan will do macro economic fixes the way the market wants but market thought that he is inferring a hands off approach from Yen-- I don't think that Yen weakness will not be probed further-- these speculators will like to take on the resolve of Fed and MOF and I would also doubt that they will intervene at 145 level I think Rubin will intervene at 152-55 level nearly very top range ogf the objective which the traders have. He being a trader would like that next time he throws billions they are well spent so why not to meet the objective of the traders and at the same time bring the Yen higher to 140 level by intervention. I jhave seen rarely intervention being successful unless it is not accompanied by a political will like in case of FRF-- the Bundesbank and Banque de france together defended the France but not before the band was widened to take care of objectives. Later on market forces stablised FRF and brought it back within the tight range. Like wise I think we will see Yen to 155 even 160 the sell off in Japan will not see below 14200--I see that the panic is the maximum when we are about to turn around- what we are seeing in Japan is pitch darkness before the first rays of light. It is during this phase you have maximum opportunity. I see that Japan domestic consumption will steadily increase-- Tax cuts and fiscal stimulas is useless if people are unwilling to spend-- it is consumption which is required by Japanese people-- the Banks are lending far more carefully than it was in the past- credit is not easy but so has the huge mountain new in bad loans is decreasing. Japnese should know that growth on the back of cheap Yen will create a backlash from China-- this is also going to kill ASEAN economies as second round of devalauations can be very difficult for Japan, the best would be domestic ingnited consumption alongwith restructrisation of loans and reorganisation of banks, will a 78 years old can do it, I would think he has nothing to loose. We need a combination of fiscal and monetary stimulas even if it means further Yen weakness the money suppply has increase they have to let it go-- in my opinion Japanese economy is on the verge of turnaround a joint coktail of fiscal and monetary stimulas will do the trick- the markets trade on future trends in my opinion we will see that next Tanken survey would take a lot of uncertainity out of the market-- if the policies direction is right I think Japan will end the year above 17800 level-- but we will see a lot of spikes and lot opportunity also.

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