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To: Jim Ilchyshn who wrote (7819)	2/23/1998 6:44:00 PM
From: goldsnow	Respond to of 116927

Yen slumps against dollar after G7 criticism 12:25 a.m. Feb 23, 1998 Eastern By Chikafumi Hodo TOKYO, Feb 23 (Reuters) - The yen slumped against the dollar on Monday after criticism of Japan's economic policy at a meeting of the Group of Seven rich nations at the weekend, dealers said. Battered by a deteriorating undertone, the Japanese unit slipped as low as 129.00 to the dollar after trading at 127.75/85 yen in late New York on Friday. The downtrend dragged other Asian currencies as well. ''Today's fall clearly shows the market's disappointment over the yen (after the G7 statement),'' said Hank Note, senior vice president at Sumitomo Bank. Dealers said the yen is expected to remain under downward pressure as long as the Japanese government is unwilling to come up with new fiscal measures to boost economy. But they said that this time the market would be looking for stronger measures, including permanent tax cuts, to satisfy the market and Japan's G7 partners. The communique issued at the G7 summit on Saturday had few surprises, but it contained blunt criticism of Japan's economic policy and cited a need to boost Japan's stagnant economy by enacting extra fiscal steps. ''In Japan, activity is low, and the outlook is weak. Recovery will require continued action to strengthen the financial system and regulatory reform of the financial and other sectors, so as to increase openness,'' the statement said. Japanese officials, however, still showed reluctance to promise additional domestic fiscal steps. The dollar gained upward momentum, breaking through a resistance at 128.50 yen after Japan's Vice Finance Minister Eisuke Sakakibara said Japan did not promise any new domestic fiscal stimulus at the G7 meeting. ''We didn't promise anything,'' Sakakibara told reporters when asked about reports that Finance Minister Hikaru Matsunaga vowed new measures to boost Japan's economy. ''What we said is that we will try to pass the fiscal 1998 budget as quickly as possible,'' Sakakibara told reporters. The vice minister said Japan made no promises beyond that. The dollar was trading at 128.82/87 yen in early afternoon Tokyo trade. ''The market is more likely to test (the dollar) towards 129 and 130 yen, but concerns over intervention should cap gains around those levels,'' Sumitomo's Note said. The G7 communique said excess currency volatility and large deviations from fundamentals were undesirable, and added it was important to avoid excessive currency depreciation where this could exacerbate large external imbalances. Dealers said Japanese trust banks were detected buying dollars for setting up fresh investment trusts that would be invested in foreign bonds. Further bargain-hunting demand by Japanese investors should leave the dollar well-supported. Asian currencies maintained their weak bias, reflecting the yen's fall and a lack of concrete action by the G7 to rescue the Asian nations from their turmoil, they said. ''We understand from the communique the G7 nations have deep concerns about the situation in Asia,'' said Seiji Shimizu, chief manager of Asian currencies department at Bank of Tokyo-Mitsubishi. Shimizu said, however, that a statement was not in itself enough. ''The point is how can they come up with concrete ways to meet the goals (stated in the communique) in the future to help the Asian nations from turmoil,'' Shimizu said. The G7 also came up with a proposal, albeit vague, to put in place an export credit scheme to help Asian nations continue importing goods and raw materials. The Indonesian rupiah on the yen's fall and speculation that the Indonesian government may have dropped its plans to adopt a fixed exchange rate under a currency board. It fell as low as 9,400 to the dollar after opening at 8,700/9,200. At 0506 GMT, it stood at 9,200/9,400. The Malaysian ringgit slipped to 3.8400/8600 to the dollar compared with 3.7400/7700 in late Kuala Lumpur on Friday. ((Tokyo Treasury Desk +81-3 3432 8785