Sorry, can't help myself, but I got to cover my bases before Earlie trys to thump me in the head..
Adding a little meat to my point on why the Can. dollar has been ailing.
Japanese banks have begun repatriating money ahead of the fiscal year-end on March 31. Repatriating money is needed to help strengthen banks' balance sheets. The banks also have dollar-denominated assets, which have increased in value because of the dollar's appreciation and the appreciation of the assets themselves. At the same time, the yen-denominated assets have lost value. The readdress of this imbalance has generated dollar sales as well.
Japanese banks also held large sums of Canadian government and provincial debt. As this matures, and much of it did over the past six weeks, Japan's banks do not appear to be rolling it over and instead are bringing their money home. This helped send the Canadian dollar to record lows against the U.S. dollar in early February. In addition, many dual currency samurai bonds are also maturing, and this requires the purchase of yen. Finally, note that Japanese banks are issuing billions of dollars' worth of preferred stock in the U.S. The proceeds from the sales may be swapped back into yen.
archive.thestreet.com
The repatriating hurt Canada to the extent that Can didn't have the investment oppz to keep the foriegn capital from bailing out. THIS ISN'T THE SAME CASE WITH THE US!!! Jap banks can sell dollar denominated assets for window dressing if necessary, but check the yields on treasuries and try to tell me that there has been any noticeable capital flight out of the US. There hasn't and there won't be. In fact, just the opposite has happened as our markets have been enjoyed capital inflows.
To reiterate a previous point, if japan were to dump treasuries in a seriously meaningful manner, rather than the selling they've been doing to meet capital requirements and protect the yen, the markets would interpret this as a sign that the bottom was falling out and the only wealth that would remain incountry would be the change in Obuchi's pocket. The rest would be parked in US and European gov't notes.
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