Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Bucky Katt who wrote (4425)	12/18/1997 5:54:00 PM
From: PaulM	Read Replies (1) \| Respond to of 116764

WJ - Take a guess at how popular the "end of the business cycle" view will be next year. I'm reminded of a snippet from Doug Casey (paraphrased): "The longer good times last, the more it seems they'll continue. The truth is just the opposite."

To: Bucky Katt who wrote (4425)	12/18/1997 6:17:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116764

>>>you will see a reason for foreign selling of dollar assets, which will weaken the dollar.>>> ÿ ''In order to kill these buyers, the BOJ would need to sell a bigger amount of dollars than it did on Tuesday,'' ÿ Full story Japan may lack ammunition to defend yen--traders 04:26 a.m. Dec 18, 1997 Eastern By Tatsuo Ito TOKYO, Dec 18 (Reuters) - After firing a broadside that scattered currency traders in confusion, Japan's monetary mandarins may be short of ammunition in the form of further ways to keep the yen rising, traders say. Sales of dollars for yen by the Bank of Japan (BOJ) on Wednesday succeeded because the action was taken in concert with a surprise income tax cut -- a dramatic shift in macroeconomic policy. The move wiped nearly six yen off the value of the dollar at one point. Traders say the authorities are expected to keep intervening to strengthen the yen, but for this to be effective they have to convince markets that economic policy will be in line with such moves. But they say there may be no more surprises in store. Japan has apparently used up all its economic policy changes that could further support dollar/yen interventions, and this will eventually corner authorities into fighting a losing battle to defend the yen, they say. ''Intervention could continue to take place, since the dollar/yen has not reached the target 120-125 yen range that they appear to want to confine it to,'' said Shinichi Abe, foreign exchange manager at Nikko Securities Co Ltd. But Abe said the dollar is unlikely to fall below 120 yen because that would be harmful to the economy and could trigger a sell-off of foreign assets held by Japanese investors. Other dealers agreed that the authorities were not satisfied with the current dollar/yen rate. In fact, the central bank again stepped in to sell dollars for yen in afternoon trade on Thursday, pushing the dollar down below 127 yen briefly. It was at about 127.45 yen in late afternoon trade on Thursday. There was vague rumour that the BOJ might slash its discount rate from the current record low of 0.5 percent as part of desperate efforts to eradicate concerns about Japan's financial system. But many traders said this is unfeasible. Masuhisa Kobayashi, vice president at Merrill Lynch in Tokyo, said: ''A further cut in the discount rate is highly unlikely unless Japan goes into a deeper depression.'' ''Moreover, such action would reduce returns on savings and be inconsistent with Wednesday's decision of to make a special two trillion yen cut in personal income taxes,'' he added. Dealers said Japan's Finance Ministry appeared to be struggling hard to see how intervention could be made as effective as possible. Central bank officials made frequent phone calls to commercial banks on Thursday morning to try to ascertain precisely the currency positions at each bank, dealers said. The Finance Ministry, under the strong command of influential Vice Finance Minister Eisuke Sakakibara, has earned a reputation for being ''invincible'' to market forces whenever it conducts currency intervention, which is made at its behest by the central bank. But a spot trader at a major Japanese bank said currency intervention without the right policy mix would merely give market players a good chance to pick up bargains, with heavy buying interest seen from U.S. funds and Japanese investors below 125 yen. ''In order to kill these buyers, the BOJ would need to sell a bigger amount of dollars than it did on Tuesday,'' he added. But such action would risk hurting the U.S. Treasury market as well as U.S. stocks because Japan needs to liquidate holdings of U.S. Treasuries for dollar sales. The BOJ was estimated to have sold more than $3 billion worth of dollars for yen in intervention on Wednesday, the first time it had taken such action since August 1992. Dealers said Japan's economic and currency measures on Wednesday were mainly designed to help restore market confidence to Japan and other Asian nations whose currencies fell sharply, economies and the financial sector were reeling. Economic linkage between Asian nations and Japan has deepened both in trade and financial markets, and the yen's fall would deepen currency turmoil in the region. ''The intervention has helped improve sentiment in Asian currencies but it is questionable that they will lead to a restoration of confidence,'' said Mikio Yasutake, manager at Bank of Tokyo-Mitsubishi Ltd. Asian nations have internal problems that should be resolved by themselves, such as improvements in disclosures in the financial sector, he added. ((Tokyo Treasury Desk 81-3-3432-1396 newsroom+reuters.com)) ^REUTERS@ Copyright 1997 Reuters Limited. All rights reserved.