Early Tokyo -2: Worries Over Russian Banks May Weigh On Mark
The mark was trading at Y72.67, up from Y72.13 earlier and above Y72.04 in New York late Monday. The mark was quoted late in Tokyo Monday at Y72.97.
Sterling was at $1.6750, down from $1.6762 earlier and below $1.6758 in New York late Monday. Sterling was at $1.6665 in Tokyo late Monday.
The dollar is expected to trade between Y120.00-Y121.50 and DEM1.6600-DEM1.6750 for the rest of the Asian day.
Earlier, Japanese short-term players snapped up dollars and Deutsche marks for yen, pushing up both currencies against their Japanese counterpart, said the trust bank dealer.
But some said worries about Russian banks' ability to repay their obligations could weigh on the Deutsche mark after a Russian moratorium on foreign debt repayments ended Monday.
"The mark looks immune to selling right now, but if Russian banks go bust, the Dow (Jones Industrial Average) will fall too, so the net effects on the dollar-mark are uncertain," said the trust bank dealer.
There was little reaction to the release of the Bank of Japan's monthly report earlier Tuesday, as the market's attention is focused on the FOMC meeting, traders said.
Traders said there wasn't much immediate reaction to news that Eisuke Sakakibara, Japan's vice finance minister for international affairs, denied a report that Japan would propose controls on short-term capital flows at the next meeting of deputy finance
ministers from the Group of Seven nations. Asked about the report, Sakakibara told Dow Jones, "No, no, that's not true."
-By Sonoko Setaishi 813-5255-2933; ssetaishi@ap.org
(END) DOW JONES NEWS 11-16-98
08:25 PM
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Russian Markets Shrug Off End Of 3-Month Debt Moratorium
By Paivi Munter, Staff Reporter
MOSCOW -(Dow Jones)- Russia's battered financial markets shrugged off the end of the moratorium on commercial debt payments Monday, though many expect the event to wipe out most of the country's banking sector.
The ruble slipped only slightly Monday, closing at 18.7 to 18.8 against the dollar at the open trading session, compared with 18.20 to 19.01 rubles Friday.
Meanwhile, Russian stocks even posted marginal gains, with the Russian Trading System (RTS) closing at 59.52 points, up 0.4% from 59.32 points Friday. However, trading volume was minuscule at $1.2 million, down from $2.6 million Friday.
The government imposed a three-month moratorium on foreign commercial debt payments Aug. 17 when it defaulted on its treasury debt and let the ruble depreciate by about 60%.
That left a lot of Russian banks, which had provided foreign investors with currency hedges, holding large debts.
Many feared the moratorium's end would wreak havoc on Russian financial markets, since domestic commercial banks are estimated to owe western creditors as much as $7 billion in all.
Although some market participants last week predicted the ruble would drop markedly at the end of expiry, there was no stampede to buy dollars for foreign debt payments Monday.
When the payments came due, few Russian banks were actually seen to be honoring their obligations, market participants said.
"Several banks had no intention of paying their debts regardless of the moratorium, so why should they buy hard currency?" said Dmitri Panteta, a trader at International Moscow Bank.
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