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To: PaulM who wrote (9731)	4/10/1998 4:24:00 AM
From: Alex	Read Replies (1) \| Respond to of 116815

Nice post Paul - Yen to rise another 20%??????????? Japan's New Tax Plan Sends Yen On A Wild Ride JEFF YASTINE: Well, hoping to head off Japan's first recession in 24 years, Prime Minister Hashimoto today outlined a temporary income tax cut. But that move spurred a seesaw day for the yen on world currency markets. Closing with the dollar off about 1/3 of a yen. Darren Gersh, reports. DARREN GERSH, NIGHTLY BUSINESS REPORT, CORRESPONDENT: Minutes after the Japanese prime minister had announced details of the 2-year $30 billion tax cut, world currency traders voiced their skepticism. Selling yen and driving the dollar 1 1/2 percent higher. ALEX BEUZELIN, MARKET ANALYST, RUESCH INTERNATIONAL: Tax cuts were deemed to be insufficient in terms of the amount. And also, because of their temporary nature, the market is looking for more permanent type of tax cuts in order the get the Japanese economy firmly on the path toward recovery. GERSH: Economists fret the super-saving Japanese will not see a temporary tax cut as a fundamental change in their income levels. So instead of increasing their spending, consumers will stash the extra money in the bank. To counter the market backlash, Japan then rushed into the currency markets to prop up the yen. Soon after that, U.S. Treasury Secretary Robert Rubin said, he welcomed the intervention and shared Japan's concerns about the weak yen. That helped drive the dollar back down 3 percent. Economist Fred Bergsten says the Japanese government is moving in the right direction. But needs to do more. C. FRED BERGSTEN, DIRECTOR, INSTITUTE FOR INTERNATIONAL ECONOMICS: The Japanese government clearly realizes they have to take major steps to get their economy moving. If they don't, the whole Asian recovery will stall. The world economy is in jeopardy. And Japan, itself, is in big trouble. They have moved a long way over the last few months. I think they have to still do more to implement the program fully, faithfully and effectively. But I think there is now a better chance than we have seen in several years that they are going to do so. GERSH: Bergsten says, a stronger yen should help bring down Japan's soaring trade surplus with the U.S. BERGSTEN: The critical question is: Whether the markets believe the new Japanese fiscal program will really get the Japanese economy growing? If it does, then I think the yen will rise. It could rise considerably, by 20 percent or more, over the next few months. GERSH: The market's attention now turns to next week's meeting of the G7 industrialized countries. The question is: Will the United States and Europeans press the Japanese to do even more to stimulate their economy? And how will the Japanese respond? Darren Gersh, NIGHTLY BUSINESS REPORT, Washington. Nightly Business Report transcripts are available on-line post-broadcast. The program is transcribed by FDCH. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c)1998 Community Television Foundation of South Florida, Inc.