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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Chip McVickar who wrote (206)	6/17/1998 1:53:00 PM
From: Henry Volquardsen	Read Replies (2) \| Respond to of 3536

This yen intervention is a holding action as both countries central banks will likely sterilize impact on their money markets. They are buying time until they decide on some specific policy initiatives to redress the imbalances. When you boil away all the verbiage, there are only two developments that could lift Japan out of its current deflationary difficulties. Either depreciate the yen to make Japanese assets (real estate, businesses etc not trade goods) more attractive internationally or raise the level of global inflation sufficiently to stabilize Japanese prices. It will be very interesting to see which medicine they choose. This weekends meetings should be very interesting.