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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Don Green who wrote (17463)	6/15/1999 8:39:00 PM
From: Les H	Respond to of 99985

Japan Can't Keep the Yen Down, Traders Say Bloomberg News June 14, 1999 FRANKFURT - Finance Minister Kiichi Miyazawa may be fighting a losing battle to keep the yen from rising against the dollar, currency traders and analysts said over the weekend. Mr. Miyazawa suggested Saturday that Japan might intervene again in foreign-exchange markets to slow the yen's rise. ''I favor a market that moves in an orderly manner,'' he said after meeting in Frankfurt with his fellow finance ministers from the Group of Seven industrialized nations. ''Any factors that could disrupt the market should be rectified.'' Tetsu Aikawa, a foreign exchange manager at Sanwa Bank Ltd. in Tokyo, added, ''The Japanese government doesn't want a stronger yen right now.'' He said this was because of the negative impact on exporters' profits. Still, further moves in currency markets like the purchase Thursday of an estimated $1 billion by the Bank of Japan are not likely to keep the yen from rising, he said. ''Given Japan's good figures for the first quarter,'' Mr. Aikawa said, referring to its gross domestic product growth, ''and a possible slide of U.S. stocks amid expectations for a U.S. rate hike, the yen has no choice but to rise.'' The U.S. Treasury secretary, Robert Rubin, and Finance Minister Hans Eichel of Germany said the G-7 ministers did not discuss exchange rates at their meeting Saturday, suggesting that they did not pressure Mr. Miyazawa against currency-market interventions. The yen rose 3.5 percent against the dollar last week, its largest weekly gain in six months, spurred by news that Japan's economy grew in the first quarter for the first time in more than a year. The dollar closed Friday in New York at 117.95 yen. Takeshi Hanai, head of foreign exchange at Industrial Bank of Japan Ltd. in Tokyo, said he expected the Bank of Japan to intervene at the direction of the Finance Ministry if the dollar fell below 117 yen. Such a move would only have a limited chance of success unless the European Central Bank joined with the Bank of Japan to raise the value of both the euro and the yen against the dollar, Mr. Hanai said. ''Interventions that are not in line with fundamentals won't be effective,'' he said. Mr. Hanai said he did not expect the Europeans to aid in the intervention. ''The BOJ will be a sole warrior,'' he said, adding, ''The U.S. won't lend a helping hand, because the U.S. doesn't care much about a weakening dollar.'' Mr. Hanai said U.S. monetary authorities were expecting the dollar, bonds and stocks to weaken further in anticipation of a possible rise in U.S. interest rates at the end of this month. In Japan, stocks climbed to a five-week high Friday and bond yields rose, a day after the government reported its GDP rose 1.9 percent in the first quarter. ''Foreign investors must have begun to think that they should buy Japanese financial assets,'' said Mr. Hanai. ''Japanese stocks look rather promising after the strong showing in the first-quarter GDP, while U.S. stocks and bonds seemed to peak out.''