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To: maceng2 who wrote (177200)	7/3/2002 1:15:33 AM
From: maceng2	Read Replies (1) \| Respond to of 436258

Yamaguchi - impact of US fund outflows on forex markets needs to be monitored Bank of Japan deputy government Yutaka Yamaguchi said the impact on the forex markets of the recent outflow of funds from the US needs to be carefully monitored. Speaking in English, Yamaguchi said that "the US dollar reached its peak in January and has been depreciating significantly since then. Such a forex rate movement reflects these changes in global capital flows such as declines in direct investment into the US in favour of the euro zone. "These developments warrant careful monitoring as they could have a global impact," he told a press briefing. Yamaguchi, referring to Japan, said "it is my impression that declining asset prices, expecially in the property market, has had a much more severe impact on economic activity than the moderate deflation of goods and services (prices)." In terms of monetary policy, he said, "it is significant that our flexible and abundant provision of liquidity (has contained market participants' concerns over liquidity financing," he said, adding that there "is little doubt such accommodative monetary conditions (have) played a key role in avoiding a deflationary spiral." Referring to the possibility that the BOJ could directly buy stock or property so as to make the current policy of quantitive monetary easing more effective, as well as boosting their prices, Yamaguchi said "I am sceptical if (such a) central bank operation directly affects prices in this world of free capital flows." © AFX News ananova.com