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To: Defrocked who wrote (27417)	3/24/1999 12:41:00 PM
From: John Pitera	Read Replies (3) of 86076

Hi, Def, been thinking about this statement ~~3)Commercial positions in yen futures are often arbitrage positions and therefore reveal little about hedger intentions that some believe are meaningful in other markets. Yen futures are insignificant to the forward currency market. ~~ what you say about arbitrage makes sense. Since short-term rates are higher in the US than in Japan and have expanded this past month. Then if I am long $/yen, every day I hold my position I am earning points that are moving my trade further down giving me a lower cost basis. If I don't want market risk I go in and get a long yen position in the futures to offset my short yen in the cash market. Hence I have no directional exposure to the dollar/yen rate and captured the interest-rate differentials between the 2 currencies. so that may account for some of the long commercials on yen. thanks for that. John

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