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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (72063)	3/15/2011 3:29:28 PM
From: elmatador	Read Replies (1) \| Respond to of 218918

Yen strength recalls reactions to Kobe By Peter Garnham Published: March 15 2011 18:20 \| Last updated: March 15 2011 18:20 The resilience of Japan’s currency might at first seem surprising. The yen has strengthened as investors bet that the severity of the disaster will increase repatriation flows by insurers to meet claims. Investors also believe that reconstruction needs could prompt companies to repatriate foreign earnings, while more risk aversion among Japanese households will damp demand for foreign assets. EDITOR’S CHOICE Yen rises as disaster sparks position liquidation - Mar-15BoJ makes $265bn available - Mar-14Lex: Bank of Japan - Mar-14Spain debt downgrade hits euro - Mar-10Short View: The Pushmi-pullyu euro - Mar-09Earthquake prompts New Zealand to cut rates - Mar-10There is a useful precedent: the yen’s reaction to the 1995 Kobe earthquake. Then, the yen rose 20 per cent against the dollar within two months of the tragedy as Japanese investors brought back funds to deal with the aftermath. The yen eventually peaked at a record high of Y79.70 in April of that year. In what many traders are predicting could be the start of a similar pattern, the yen rose to a four-month high of Y80.70 on Tuesday, within striking distance of its record high, and now stands 2.4 per cent higher since the earthquake. The yen is also up 1.3 per cent against the euro, 2.4 per cent stronger against the pound and 3.4 per cent stronger against the Australian dollar since Friday morning. Like 1995, the dollar is in a broad downtrend and money market interest rates are relatively low in Japan. But analysts say there are significant differences with 1995 that could undermine the yen in the longer run. Many believe that its appreciation after Kobe was exaggerated by the collapse of Barings Bank, which had established a substantial long position in dollar/yen. The liquidation of this position added to selling pressure. Now the market is positioned the other way around. Data from the Chicago Mercantile Exchange show speculators were betting on gains in the yen against the dollar ahead of the earthquake. Hans Redeker, head of FX strategy at BNP Paribas, says there is a another, bigger difference: Japan’s fiscal position. Tokyo’s debt levels have deteriorated heavily to stand at 200 per cent of gross domestic product. This makes it more difficult to fund the public spending required to rebuild. “In 1995, Japan’s debt levels were low and private savings were rising,” says Mr Redeker. “Now the picture is completely reversed.” He says that, ultimately, it might be the Bank of Japan that has to close the funding gap by buying Japanese government bonds in the open market. “When the BoJ balance sheet increases, the yen will decline. We stick to our view of seeing the yen entering a weakening trend,” says Mr Redeker. Lee Hardman, forex strategist at Bank of Tokyo-Mitsubishi UFJ, agrees, saying that beyond the near-term boost from repatriation, the yen is likely to struggle. The Bank of Japan, he believes, is likely to continue printing money to fund the country’s recovery. This loose monetary policy stance contrasts with expectations for tightening elsewhere.

To: Haim R. Branisteanu who wrote (72063)	3/15/2011 7:01:58 PM
From: TobagoJack	Read Replies (1) \| Respond to of 218918

am in shanghai, to return to hk today. did not get a chance to do much of anything except discuss with prospective client on how they may seek salvation on a perhaps to be sunk sunk-cost 'investment' to do with a coal-to-liquid effort that over the years has consumed usd 200 mil in feasibility study cost. shall travel to s.africa next week. in between times i will do something. am attending asiahedge conference this afternoon in hk. presumably all there would be fascinated with the japanese weather channel as well as middle east / north africa cultural activities. interesting times.