Haven't posted to the BK thread for a while. I smell something funny in the air.... Japan's continued banking troubles, BUBA not touching rates....
biz.yahoo.com
also:
Top News
Fri, 23 Oct 1998, 12:04am EDT
10/22 Dollar Rises Against Yen for 4th Day on Weakness in Japan's Economy
Dollar Rises vs Yen for 4th Day on Weakness in Japan's Economy
Tokyo, Oct. 23 (Bloomberg) -- The dollar rose against the
yen for a fourth day amid doubts Japan will quickly strengthen
the financial system and climb out of its worst recession in 50
years anytime soon.
Further signaling weakness, Long-Term Credit Bank of Japan
Ltd. applied for a government takeover in the country's first
bank nationalization since World War II. The takeover comes as
Japan launches a 60 trillion yen ($510 billion) bank bailout
package in a bid to encourage more lending to companies and spur
economic recovery.
''The LTCB move was widely expected, and this won't quickly
resolve the credit crunch issue,'' said Takeshi Imamichi, a
foreign exchange manager at Industrial Bank of Japan Ltd. ''I
expect the dollar to be on a firm footing, trading above 117 yen,
because Japanese are likely to buy it for overseas investment.''
The dollar was quoted at 118.30 yen, up from 117.44 yen in
late New York trading yesterday. It was quoted at 1.6394 marks,
up from 1.6373 marks in New York.
The U.S. currency yesterday reached a one-week high of
118.86 yen, amid signs Japan's worst recession in half a century
is deepening. The Economic Planning Agency said yesterday
Japanese consumers were the most pessimistic they've ever been
about the near-term economic outlook.
Need Kickstart
''They need a kickstart to the economy and still they
haven't gotten that,'' said Ron Palumbo, a currency salesman at
Mellon Bank in Boston. ''They haven't gotten things moving.
Fundamentally, dollar-yen should still be in the 150-160 yen
area.''
The Japanese government forecast the economy will contract
1.8 percent in the year ending March 31. So the Bank of Japan
isn't likely to raise the discount rate, at which it lends money
overnight to banks, from a record low of 0.5 percent anytime
soon.
That prompts Japanese to invest abroad for higher returns,
especially after the dollar has become cheaper after falling more
than 20 percent from an eight-year high of 147.66 yen on Aug. 11.
Japanese individuals consider the current dollar level ''a
bargain'' and ''keep buying dollars to invest'' in dollar-
denominated money market funds, said Katsumi Ueno, deputy general
manager of the retail section at Nikko Securities Co.
Yasuji Yamanaka, a foreign exchange manager at Nikko Trust
and Banking Co., also said there has recently been ''constant''
yen-selling by Japanese mutual funds investing abroad. Trust
banks manage such funds.
Yamanaka added that he doesn't expect the dollar to top 120
yen anytime soon because Japanese exporters will sell dollars for
yen to bring profits home.
Bank Package
The yen was hurt also because Japanese banks are saddled
with problem loans of at least 77 trillion yen, undermining the
economy with their reluctance to lend to companies. That's why
the parliament last week approved the 60 trillion yen package in
an effort to ease tight credit.
Of the package, 25 trillion yen is set aside to recapitalize
solvent banks with public money, 18 trillion yen to pay for
government takeovers of failed financial institutions and 17
trillion yen to protect depositors in the event of bank failures.
IBJ broke the impasse late Tuesday, announcing it will apply
for funds to bolster its capital. Tokai Bank Ltd. and Daiwa Bank
Ltd. said they are interested in lining up for capital injection,
while Fuji Bank Ltd., Sakura Bank Ltd., Sanwa bank Ltd. and Bank
of Tokyo-Mitsubishi Ltd. are ''considering'' applying.
In Germany, the Bundesbank yesterday left the benchmark
securities repurchase rate unchanged at 3.3 percent during the
central bank's monetary policy meeting.
In other trading, the dollar was quoted at 1.3412 Swiss
francs, up from 1.3405 francs in late New York trading yesterday.
The British pound was quoted at $1.6943, down from $1.6958 in New
York. The mark was quoted at 72.01 yen, up from 71.84 yen in New
York.
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