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To: goldsnow who wrote (10341)	4/22/1998 7:48:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116762

Japan's Sakakibara drops hint on U.S. Treasuries 06:46 a.m. Apr 22, 1998 Eastern By Chikafumi Hodo TOKYO, April 22 (Reuters) - Influential finance bureaucrat Eisuke Sakakibara hinted on Wednesday that Japan stood ready to sell U.S. Treasuries to raise intervention funds -- a comment seen as a sign of Tokyo's growing frustration with the markets. Sakakibara, Japan's vice finance minister for international affairs, told reporters after a symposium that Japan had ample foreign reserves to intervene in the currency market. Asked about the possibility of selling U.S. Treasuries to fund forex market intervention, Sakakibara said jokingly: ''Well, you know, we can sell them anytime.'' Japan is the largest single international holder of U.S. Treasury securities, with about 25 percent of U.S. debt. These holdings are closely tracked by the markets. Sakakibara also said it was important to convince the world that Japanese assets were a ''buy'' and added that he believed the U.S. stock market would ''peak out,'' although he did not give a specific time frame. Sakakibara's comments gradually pushed the dollar down by nearly one yen from its Wednesday high, and it was trading at 130.65/70 in early European trade. The U.S. Treasuries market had shown little reaction to the comment by late Tokyo trading. Many Tokyo traders said Sakakibara's comments appeared to reflect his displeasure and irritation at the foreign exchange market's reluctance to push up the yen despite a Group of Seven (G7) communique last week which welcomed Japan's steps to stimulate demand and correct an excessively weak yen. The dollar rose decisively above 130 yen after the G7 meeting and has remained well-bid since then. The Bank of Japan had intervened heavily ahead of the G7, selling dollars for yen in New York on April 9 and the next day in Tokyo, hammering down the U.S. currency down to about 127.40 yen. Kazunori Iida, dealing section manager at Nissho Iwai Corp, said: ''The way he (Sakakibara) spoke today was strong and he seemed quite unhappy (with the yen's recent falls).'' Iida said it was natural that dollar-selling intervention by Japan would lead to some sales of U.S. Treasuries. ''But a top official like him should not have mentioned it,'' he added, pointing to its potential market impact. But bond dealers said that the comment by Sakakibara was not as shocking as remarks by Prime Minister Ryutaro Hashimoto last June, which rocked U.S. financial markets. Hashimoto said at the time that Japan had in the past been tempted to sell its holdings of U.S. Treasury securities and boost its gold reserves, but had not done so. The comment was taken by U.S. markets as a veiled threat by Hashimoto to sell off Japan's Treasury holdings and sent shockwaves through global markets. Sakakibara's comment this time was not expected to undermine the basic sentiment in the Treasury market. However, traders said there is a need to monitor the market closely following widespread talk last week that the Bank of Japan had sold about $12 billion of T-bills. On April 13, Treasury prices sank after the Federal Reserve of New York confirmed it was conducting a ''customer-related'' transaction. Dealers said the Fed was selling bills on behalf of an unnamed foreign central bank -- widely believed to be the BOJ. Traders said it was unusual for the origin of a Fed sale to be immediately known by the market, speculating that the Japan may have wanted its presence known. ''Given the fact that the BOJ had been spotted intervening in the forex market and after the rumoured sales of T-Bills, the market was not surprised by Mr Sakakibara's comments,'' said Kouki Muroi, deputy manager of financial markets trading division at Nippon Credit Bank. ''We cannot completely ignore his comments, but I don't think that this will be a major factor to trigger major sales in the Treasury market,'' Muroi said. Markets will have another chance to tune into to Sakakibara -- who is known as ''Mr Yen'' for his influence on currency markets -- on Thursday, when he speaks again at another symposium, specifically on the subject of the dollar/yen rate. ((Tokyo Treasury Desk 813-3432-8785 tokyo.newsroom+reuters.com)) ^REUTERS@