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Strategies & Market Trends : World Outlook -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (2597)	9/30/2003 7:52:21 PM
From: Don Green	Respond to of 50119

Japan Sells Yen In Forex Markets Across The Globe TOKYO (Nikkei)--Japanese monetary authorities conducted yen-selling interventions in the foreign exchange markets in Japan, the U.S. and Europe on Tuesday, according to an official at the Ministry of Finance.

To: Les H who wrote (2597)	10/1/2003 9:32:57 AM
From: Les H	Respond to of 50119

Policy implications: Policy may become more reflationary, depending how fast the yen rises Monetary policy: Market conditions are a picture-perfect image of 1999. It is still fresh in our memories how, in September 1999, with stocks dropping and the yen appreciating, the BoJ was sharply pressed to adopt a policy of quantitative easing. Given the risk of further yen appreciation, elaborating an exit strategy from ZIRP (the zero interest rate policy) is out of the question for the immediate future. The emphasis will likely be on warding off demands for further easing. For this reason, the BoJ is likely to try to please the MoF by guiding the current-account reserves held at the Bank higher, in coordination with the Ministry’s yen-selling currency interventions. The Bank probably will try to impress upon the market that it is conducting unsterilized intervention. Fiscal policy: The composition of the new cabinet makes it even more difficult to expect any shift towards an expansionary fiscal policy. But if stock prices adjust further in response to yen appreciation, there is a possibility that fiscal policy will have to bear some of the burden. Note, however, that while the stock market’s first-stage reaction to yen appreciation has been generally negative, as the market gets used to the situation, a strong yen could become a positive factor for stock prices. Our equity strategist Naoki Kamiyama thinks the stock market has overreacted and sees no reason to change his bullish outlook. The spotlight is likely to fall on fiscal policy only if the yen appreciates more than expected, for example past the ¥100/US$1 level. But such a development is unlikely, because both the Japanese and US currency authorities are unlikely to adopt a laissez-faire approach. morganstanley.com

To: Les H who wrote (2597)	10/1/2003 9:33:38 AM
From: Les H	Respond to of 50119

Japan Spends Record to Weaken Currency asia.news.yahoo.com

To: Les H who wrote (2597)	10/1/2003 9:41:20 AM
From: Les H	Read Replies (1) \| Respond to of 50119

Currency interventions prove to be both fruitless and costly japantimes.co.jp This is perhaps the most ruinous outcome of the irresponsible monetary policy pursued by the Federal Reserve under Chairman Alan Greenspan. By forcing interest rates down artificially, it has caused such a massive flood of dollars into the system that no amount of intervention will be able to stem its decline on global currency markets. While forex intervention is likely to be fruitless, it involves high costs and is a distraction from implementing other policies that could promote long-term growth. Indeed, currency intervention goes against the most basic notion of financial prudence. Basically, buying dollars that are certain to be less valuable with yen that are becoming more valuable is equivalent to a "buy high, sell low" activity