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To: Jim Willie CB who wrote (5360)	12/22/2003 2:53:01 PM
From: isopatch	Read Replies (1) \| Respond to of 108767

Jim. Japan to fight currency markets even harder. <Japan adds firepower to fight yen's rise By Bayan Rahman in Toyko and Anna Fifield in London Published: December 21 2003 19:48 \| Last Updated: December 21 2003 22:10 Japan has almost doubled the amount available for foreign exchange market intervention next year, a sign that it will continue to act aggressively to slow the yen's rise against the dollar. Seeking to assert its firepower in the currency markets, the finance ministry said it would raise the ceiling on the amount it could borrow for intervention by Y21,000bn to Y100,000bn ($930bn) for the period until March, and by Y61,000bn to Y140,000bn for the year starting in April. Currency strategists said there was now in effect no limit on how much Japan could spend trying to hold down the yen, and it could be expected to continue to intervene as readily as it did this year. Sadakazu Tanigaki, finance minister, said at the weekend that he was raising the ceiling to dispel speculation that the Japanese authorities had little room left for intervention. The move appears to run counter to a statement from the Group of Seven industrialised countries, which in September called for more flexible exchange rates to reduce global financial imbalances. The finance ministry's announcement is an indication the government will continue to protect Japanese exporters, which have fuelled eight quarters of growth. Through the Bank of Japan, the government spent a record Y17,800bn on intervention in the first 11 months of this year, although the yen has still appreciated by about 10 per cent against the dollar. The euro has risen even more rapidly, gaining more than 16 per cent in that time. "These numbers are pretty huge, especially if you consider that they have already put more than $150bn into the markets this year," said Tony Norfield of ABN Amro in London. "The [European Central Bank] is concerned that the euro has borne the brunt of the adjustment. This is going to cause further concern that the 'free-floating' currencies are having to shoulder the burden of the dollar's weakness," he said. Analysts said the dollar's depreciation would continue to drag the yen higher, but by raising the ceiling, Japan would be able to limit the pace at which its currency rose. Although the euro has been bearing the brunt of the dollar's weakness, Ray Attrill of 4Cast, the economic consultancy, said the European Central Bank was unlikely to follow Japan's lead. "The Japanese authorities are probably on their own and will continue to intervene in isolation, but Europe is likely to start to get upset if the euro rises against the dollar because of Japanese intervention," he said. Japan's cabinet at the weekend approved a marginally bigger budget for next year as it tried to balance the need to close the budget deficit with a desire not to stifle economic growth through fiscal tightening. The cabinet approved an Y82,111bn budget for the year beginning in April, a 0.4 per cent increase from this year. The new budget features cuts in defence, overseas aid and public works spending but requires record bond issuance because of higher social welfare and debt servicing costs.> Message 19619475