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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Henry Volquardsen who wrote (853)10/9/1998 11:04:00 AM
From: Chip McVickar  Read Replies (1) of 3536
 
Henry,
If the Fed wanted to lower the dollar against the Yen, without "spooking"
and tipping their hand to the markets, they certainly picked an excellant
point to accomplish that means. Timing the unwinding of the Yen/Dollar
balance....under the cover of international hedge funds unwinding.
Would Greenspan use the cover of LTCM to accomplish that end?

But does the Fed actually work that way..?

I've felt that the Fed actually has wanted to lower the dollar and
remove pressure from the whole floating rate system. But to accomplish this
they could not risk sending the wrong signals. If the US had abandonded
its stronge dollar to bailout the Japanese openly that would certainly
have sent a much stronger message to the system and impling that the
Japanese financial system was far from being solvent. It would have opened
the risk for a free fall.

Most interesting was the final comments on the hedge funds.
Chip

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