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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Think4Yourself who wrote (51797)	9/24/1999 11:17:00 AM
From: Richard D	Read Replies (2) \| Respond to of 95453

JQ Public, the currencies are to a large extent determined by the balance of trade, and somewhat by local interest rates (which are tied as well to local inflation) or return on investments (like the US stock market) and somewhat by the perceived strength of the economy. If a country is on balance an exporter, all things being equal, their currencies should strengthen until their exporting products no longer are competitive in local currencies. So ... Japan is largely an exporting country (even though they import oil, it is dwarfed by their high tech exports, etc.). The yen gets stronger (dollar weaker) as their export industry kicks into high gear, which is happening now. The thing that has kept the Yen down is the near zero interest rates there, and the perceived sluggishness of their economy over the past couple of years. These things may be changing, and their investors may be pulling money out of U.S. assets for various reasons, worsening the dollar Yen situation. The oil exporters probably have to be viewed on a case by case basis, depending on the U.S. balance of trade with each country. As the dollar worsens against Mid-eastern countries, the old logic of their goods no longer being competitive (like the above example with Japan) is somewhat lost, because OPEC has a near monopoly on oil. So it's difficult for the U.S. to shop around for cheaper oil. If the U.S. imports a fixed quantity of oil regardless of the devalued dollar, then the trade balance worsens with OPEC countries, since each barrel is that much more expensive and the total imports for the U.S. rises in dollars terms from each of these OPEC countries. I'm not saying that's what's going to happen, though (that WOULD be a crisis.) If there were a big dollar crisis (read not a Yen crisis), there would be substantial incentive to invest in domestic oil production, since this is one of the few commodities not in a deflationary death spiral <g>. Therefore everybody should stop what they're doing and invest in PTEN <g>, which stands to benefit from both domestic natural gas spikes, and the oil inflation. Richard