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

To: nelli who wrote (27252)	9/25/1999 9:27:00 PM
From: posthumousone	Read Replies (1) \| Respond to of 99985

Someone want to analyze this: G7 Wins Japan Pledge To Boost Economy Would think this melts up mkt... Saturday September 25 8:40 PM ET G7 Wins Japan Pledge To Boost Economy By Knut Engelmann WASHINGTON (Reuters) - Major industrial nations said Saturday Japan had agreed to inject more money into its fragile economy to boost growth and rein in its rising yen, which they agreed was a threat for the entire world economy. Finance ministers and central bankers from the Group of Seven (G7) major industrial nations gave no indication in a statement issued after their meeting Saturday that they are willing to join Japan's recent efforts to stop the yen's rise by selling it on the open market. ``We shared Japan's concern about the potential impact of the yen's appreciation for the Japanese economy and the world economy,' the statement said. It is extremely rare for the G7 to mention a specific currency when it discusses foreign exchange markets. Japanese authorities pledged 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,' the G7 said. The outlook for Japan's economy, the second largest in the world, and the impact of the rising yen on its fledgling recovery figured high on the agenda of the G7 -- Britain, Canada, France, Germany, Italy, Japan and the United States. The yen has risen about 14 percent against the dollar since early July, a gain large enough to spark fears it could make Japanese exports too expensive and throw Japan's recovery off track, and threaten the health of the global economy. JAPAN WANTED G7 SUPPORT TO CAP YEN RISE Japan wanted the support of its G7 partners in its battle to tame the high flying yen. But the United States has been reticent about the idea of joint intervention in currency markets and urged Tokyo to go further to reflate its economy and boost domestic demand. Last week the Bank of Japan said it would not inject new liquidity into the economy, something its G7 partners -- and the United States in particular -- have been calling for vociferously. Japan's commitment to economic stimulus appeared to be a major step toward satisfying its partners' demands. While Japan failed to secure any commitment for joint intervention, the ambiguity of the G7 statement left the threat of such a dramatic move open. Italian Treasury Minister Giuliano Amato said the statement did not rule it out. ``There could be intervention,' Amato told a news briefing following the G7 meeting. ``The G7 does not rule out yen intervention, but does not state that the intervention will take place, nor does it specify timing or amount.' But European Central Bank President Wim Duisenberg said currency intervention was not discussed at the meeting. ``Interventions were not discussed, but the intention is to continue to cooperate as is appropriate,' Duisenberg told reporters. G7 PLEDGES TO WATCH CURRENCY MARKETS CLOSELY The G7 statement, falling back on its standard language, said the group was watching foreign exchange markets developments closely and would cooperate as appropriate. U.S. Treasury Secretary Lawrence Summers declined to go beyond the G7 statement. ``A good deal of thought and care went into the words we chose in the (G7) communique, certainly with respect to these issues, and I would not want to try and interpret the words further for you. I think they speak for themselves,' Summers said at a news conference following the G7 meeting. The group said it saw more stable conditions in the world economy and that it saw signs of renewed growth in many Asian nations which had been battered by the financial crisis. The financial leaders also said that the economies of the European Union were looking brighter, but also urged more structural reforms. Economic growth in Europe and Asia could take some pressure off the United States, which as the world's major engine of growth in the last few years, has seen its trade deficit soar to record highs. Those deficits have unnerved financial markets and have helped fuel the yen's rise against the U.S. dollar. The G7 statement -- which in large parts reflected language recently used by U.S. officials -- said economic prospects for major industrial nations had improved. But it added that ``we still face a number of challenges' to make the world economy a better and more stable place. On another issue, the G7 urged Russia to crack down on corruption and capital flight to ensure international funds do not go astray.