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To: Bobby Yellin who wrote (12562)	6/3/1998 3:02:00 PM
From: Alan Whirlwind	Read Replies (1) \| Respond to of 116791

But can we take the government seriously? --Alan

To: Bobby Yellin who wrote (12562)	6/3/1998 5:44:00 PM
From: Alex	Read Replies (1) \| Respond to of 116791

G7 countries will try to curb yen fall - Goldman NEW YORK, June 3 (Reuters) - Group of Seven nations will likely act to bolster the yen in currency markets to stem the economic slide across Asia and other emerging markets, according to Goldman, Sachs & Co. The G7 may deem it necessary to temporarily bolster the yen until Japan's planned economic stimulus and reforms pull the nation out of its economic doldrums, said the brokerage firm in its client letter, the ''Weekly Analyst.'' Goldman said it is ''inevitable at some stage that the G7 countries will try to halt the yen's weakness, and while the market will doubt its effectiveness, it is quite likely that the G7 could stabilize the yen at stronger levels until the fiscal package has an impact from Q3 onwards.'' Additional yen weakness may worsen the Asian contagion to other emerging countries like Russia, Brazil and Mexico by weakening commodities prices and introducing higher risk premiums to compensate foreign investors, Goldman said. Also, the firm said a declining yen makes a mockery of International Monetary Fund-driven policies in countries like South Korea and Thailand, where currency stability is regarded as a major priority. Japanese policymakers believe the fiscal stimulus plans will have a positive impact on the economy but measures have yet to be implemented, said Goldman. Without G7 intervention, dollar/yen will likely move toward 142, the top of the firm's forecasted Q2 trading range, with a risk to the upside. Elsewhere, dollar bloc economies continued to be impacted by the crisis in Asia. Their currencies show abnormally high correlations to the yen because of Japan's importance as an export market and the steep slide in commodities prices. Relatively speaking, Goldman said the Australian and Canadian economies are best positioned for continued growth and stable monetary policy. Meanwhile, New Zealand monetary policy is expected to lean toward easing well into 1999. ''In terms of strategy, we continue to favor the A$ and C$ over the NZ$. Both Australia and Canada are in a much better economic position relative to New Zealand to handle the negative effects of the Asian crisis,'' the report said. Goldman forecast the NZ$ will weaken from about A$0.86 currently to A$0.83 in the near-term, with a medium-term target of A$0.80. Meanwhile, dollar/Canada at $1.4560 is vulnerable to a shift in U.S. short rate expectations that would widen the modest interest rate differential favoring the United States.