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To: Bobby Yellin who wrote (9841)	4/12/1998 6:08:00 AM
From: Zardoz	Respond to of 116762

BOJ backs yen again Japanese central bank continues selling dollars to stop yen plunge April 10, 1998: 7:10 a.m. ET TOKYO (Reuters) - The Bank of Japan's persistent dollar-selling intervention halted the currency's rise against the yen Friday, but that action alone may not be enough to push the U.S. currency off its upward path, dealers said. Without clear signs of improvement in the Japanese economy, the impact of intervention may be limited and that should keep the dollar's long-term outlook bullish, they said. The central bank was seen Friday as an aggressive seller of dollars for yen in Tokyo, keeping up its surprising efforts from Thursday in New York. The dollar fell from a Tokyo high during the day of 131.55 yen to below 128 yen after what dealers said were persistent bouts of dollar sales for yen from late morning. "It appeared that the BOJ wants to bring the dollar/yen lower. [Overnight intervention] didn't look like a price-smoothing operation, but was aimed at taking the dollar down to some level," said Mitsuru Saito, deputy general manager of Treasury Department at Sanwa Bank. "The BOJ's sole intervention may be able to cap the dollar for some time, but I don't think its effort can alter the basic bullishness of the dollar." The BOJ's action was taken ahead of Wednesday's Group of Seven (G7) industrialized nations' meeting in Washington, where currency exchange levels are expected to be discussed. It came also ahead of the Easter holidays in the United States and Europe, where the markets will be shut. The BOJ shocked the market by intervening during New York trading Thursday. The central bank apparently first stepped in at around 133.00-133.50 yen and kept going all the way to under 130 yen in New York. "I think the BOJ gave a pretty distinct signal to the market that it wanted the dollar to go lower against the yen," a senior Australian bank dealer said. "I don't know whether the yen can sustain these levels, but it was enough to have a psychological impact on the market." The central bank intervened in the currencies market three times on Thursday, buying yen for dollars in considerable amounts, an Economic Planning Agency official quoted BOJ Governor Masaru Hayami as saying Friday. The dollar rebounded Thursday shortly after Prime Minister Ryutaro Hashimoto announced the government would pour 10 trillion yen ($78.1 billion) directly into stimulating the economy. It gained strength as the steps were not perceived to be bold enough to satisfy the market, dealers said. The prime minister told the nation that the government would put 10 trillion yen into direct fiscal stimulus, including four trillion yen in income tax cuts over two years, to revive the economy from its "severe state." "The intervention may only slow the pace of the dollar's rise, but the dollar is expected to be well-bid due to its sound fundamentals," said Yasuhisa Morikuni, assistant vice president at Bank of America (BOA). "Without concerted intervention, the dollar is unlikely to slide [against the yen]." U.S. Treasury Secretary Robert Rubin Thursday welcomed the Japanese intervention but made no mention on whether the United States would join in. In the near term, the market will focus its attention on next week's G7 meeting to determine the trend of the dollar/yen, dealers said. "In the short term, the market will become cautious before the G7 meeting, but operators are still likely to buy dollars," said Sanwa's Saito said. Dealers said that they want to see what Japan will bring back from the meeting, particularly after the tax cuts and economic steps unveiled Thursday.