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To: At_The_Ask who wrote (148133)	2/3/2002 9:34:24 PM
From: Haim R. Branisteanu	Read Replies (2) \| Respond to of 436258

DJ Dollar Outlook: Yen Likely To Slide Vs Dlr In Feb By John Hardy Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--The yen is likely to lose further ground against the dollar in February, but the euro is expected to fluctuate around current levels, according to analysts surveyed by Dow Jones Newswires. Stretching their forecasts to the end of April, analysts predicted a continuation of February's trends, although euro bulls and bears are fairly evenly matched. The most bullish euro outlook is offered by Rich Kasmin, head of economic research at HotspotFX in Watchung, N.J., who sees the single currency moving steadily higher from current levels as investment flows start to favor the euro zone. "We've seen a drop off in outward capital flows from the euro zone, which has been one of the euro's problems" he said. Kasmin's euro/dollar outlook is primarily based on his skeptical view of the pace of the U.S. economic recovery - seeing lackluster growth causing the dollar to falter. "The U.S. economy isn't as strong as people think it is," he said, "and that favors the euro." Even the euro bears are rather restrained in their expectations for further weakness. Both Andrew Busch, director of foreign exchange at Bank of Montreal in Chicago and Satoru Ogasawara, foreign exchange strategist at Credit Suisse First Boston in Tokyo, expect the euro to dip to lows at $0.8400 in three months. They see relative economic growth performance favoring the U.S., with Busch expecting "the U.S. recovery to occur more quickly than people think." Ogasawara also perceives a U.S. growth advantage, suggesting that euro-zone fundamentals will continue to lag and, as a result, "the euro will remain weak against the dollar" Along with most of the analysts in the survey, Ogasawara expects a weakening yen and thinks this will also weigh on the euro. Only Rob Hayward, senior currency strategist at ABN Amro in London, expects the yen to firm against the dollar in the next three months, basing his view on positive capital flows and increasing Japanese government discomfort with a weakening currency. "We think dollar/yen has something of a cap around Y135," he said, "we'll see (Japanese companies) selling (offshore) yen assets and we think the Japanese government will become more concerned over the effect of a weak yen on domestic equity and bond markets." But the view that the Japanese authorities are still relatively comfortable with a weakening yen plays a role in the outlook suggested by Neil Parker, currency strategist at BNP Paribas in London, who sees markets pushing the yen lower, while the euro firms modestly. "It's clear from the commentary from (Japanese) financial officials that they'd like to see a weaker yen and (U.S. Treasury Secretary Paul) O'Neill doesn't seem too perturbed," he said, "and the (Japanese) economy just keeps getting worse." Both Tokyo-based analysts are bearish on the yen's prospects, with Toru Umemoto, foreign exchange strategist at Morgan Stanley, looking for dollar/yen to continue to make new highs this year, reaching Y150 at the end of April. Umemoto's forecast is clearly based on his highly downbeat view of Japanese economic, political and business prospects. "I think Japan's political situation will be rickety (and) it will either collapse or will be close to collapsing," in three months, he said. And, this growing political instability will be added to the problems created by a further deterioration of the economy, increasing corporate bankruptcies and yen-weakening capital outflows, he suggests. And, not merely does Umemoto expect dollar/yen to strengthen sharply, he also sees the yen weak versus the euro zone, with the euro/yen cross rising a striking 13% from current levels. Table Of One-Month And Three-Month Forecasts Andrew Busch, director of foreign exchange at Bank of Montreal in Chicago. ------ Feb. 28 April 30 euro/dollar $0.8800 $0.8400 dollar/yen Y132.50 Y137.00 euro/yen Y116.60 Y115.08 Rich Kasmin, head of economic research at HotspotFX in Watchung, N.J. euro/dollar $0.8800 $0.9200 dollar/yen Y135.00 Y140.00 euro/yen Y118.80 Y128.80 Rob Hayward, senior currency strategist at ABN Amro in London. euro/dollar $0.8550 $0.8700 dollar/yen Y134.00 Y132.00 euro/yen Y114.57 Y114.84 Neil Parker, currency strategist at BNP Paribas in London. euro/dollar $0.8750 $0.8800 dollar/yen Y134.50 Y138.00 euro/yen Y117.69 Y121.44 Toru Umemoto, foreign exchange strategist at Morgan Stanley in Tokyo. euro/dollar $0.8600 $0.8700 dollar/yen Y140.00 Y150.00 euro/yen Y120.40 Y130.50 Satoru Ogasawara, foreign exchange strategist at Credit Suisse First Boston in Tokyo. euro/dollar $0.8500 $0.8400 dollar/yen Y135.00 Y138.00 euro/yen Y114.75 Y115.92 -By John Hardy, Dow Jones Newswires; 201-938-2122; john.hardy@dowjones.com (Yukiko Tsuba and Lisa Twaronite in Tokyo contributed to this article) (END) DOW JONES NEWS 02-03-02 04:00 PM