Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : The Naked Truth - Big Kahuna a Myth -- Ignore unavailable to you. Want to Upgrade?

To: Lucretius who wrote (64218)	9/25/1999 8:18:00 PM
From: Maarten Z	Read Replies (2) \| Respond to of 86076

G7 has no plans for intervention. If dollar shows continued weakness going into Monday am then perhaps we will see renewed selling. quote.bloomberg.com Washington, Sept. 25 (Bloomberg) -- The yen's appreciation is a concern, although for now it's up to the Japanese to drive down their currency's value, finance ministers and central bankers from the Group of Seven leading industrial nations said. ``We will continue to monitor developments in exchange markets and cooperate as appropriate,' the G-7 ministers said in a statement, matching word for word the declaration after the last G-7 meeting in February. The yen's 17 percent rise against the dollar and the euro in the past three months makes Japanese exports more expensive and threatens the country's recovery from its worst recession since World War II. Still, the statement suggests the G-7 countries -- the U.S., Japan, Germany, France, the U.K., Italy and Canada -- aren't prepared to immediately engage in a joint effort to weaken the yen. Italian Treasury Minister Giuliano Amato told reporters after the one-day meeting that the ``G-7 does not rule out intervention as an instrument of cooperation. They're not saying they will intervene, and they're not saying they won't.' Even so, the G-7's stand-pat move should send the yen higher against the euro and the dollar, analysts said. ``We think the yen will jump like a rocket,' said Carl Weinberg, chief economist at High Frequency Economics Ltd. in Valhalla, New York. The yen closed at 104.18 to the dollar on Friday. Shares Japan's Concern In their final communique, the G-7 leaders said ``we share Japan's concern about the potential impact of the yen's appreciation for the Japanese economy and the world economy.' ``Japanese authorities reiterated their intention to implement stimulus measures until domestic demand-led growth is solidly in place and, in the context of their zero interest-rate policy, to provide ample liquidity until deflationary concerns are dispelled,' according to the statement issued after a meeting lasting more than five hours at the Decatur House near the White House. Mention of the yen in the statement was unusual. The G-7 has in the past avoided mentioning individual currencies. The April, 1995 G-7 statement calling for an ``orderly reversal' of exchange rates did not specifically mention the dollar or yen, though the statement was precipitated by the dollar's fall to 80.63 yen. Some officials at Japan's Ministry of Finance floated the idea of coordinated yen sales by the U.S. and possibly other G-7 countries in the days before the meeting. Hour-Long Meeting An hour-long meeting between Japanese Finance Minister Kiichi Miyazawa and U.S. Treasury Secretary Lawrence Summers this morning at the Treasury Department didn't produce even the usual statement that both sides had agreed to monitor developments in exchange markets and cooperate as necessary. Interventions, once widely used to manipulate currency values, have fallen into disfavor. The last time the U.S. joined with Japan to intervene in currency markets was June 18, 1998, when they sold dollars for yen to prop up the Japanese currency, which had fallen to 147 to the dollar. European countries haven't joined in a G-7 intervention in four years. One reason the ministers are in no hurry to help Japan sell yen is that while much of East Asia may be relying on a Japanese economic rebound for the investment and trade it would bring, the U.S. and Europe are not. European Central Bank council member Otmar Issing said yesterday that European policy-makers aren't much concerned about the effect of exchange rates on trade because the 11-nation euro area's dependence on commerce outside the region is shrinking. And while the U.S. deficit with Japan widened in July to a record $6.8 billion from $6.3 billion in June, that trade gap has had little impact on domestic growth and is not the politically charged issue it once was. Although the U.S. hasn't changed its policy of favoring a strong dollar, Summers said last week the yen's rise won't slow U.S. growth. ``The basic momentum of our expansion should be maintained,' he said. Growth Prospects European countries, looking to jump start stagnant growth on the continent, have benefited from the stronger yen, which makes European products more competitive. Germany, Europe's biggest economy, reported a 3.3 percent rise in overseas orders in July. The euro's current exchange rate is ``appropriate,' Bundesbank President Ernst Welteke said earlier this month, ``because it doesn't hamper strengthening demand from abroad but it also doesn't pose any threats for price stability at home.'