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To: Caxton Rhodes who wrote (11555)	6/16/1998 8:01:00 PM
From: Ramsey Su	Read Replies (1) \| Respond to of 152472

Caxton, from South China Morning Post. So who is white knight trying to rescue the yen? There is a cynical theory that US and Japan have the most to gain if the yen is allowed to fall. The US benefits because it has the same effect as raising interest rates to slow down the economy. Japan benefits because they can in theory convert USD denominated investments into more yen to help rescue the banks. Is today a sucker rally? Time will tell. Ramsey Yen white knights hedge funds SHEEL KOHLI in London The US dollar-yen foreign exchange market experienced one of its most volatile trading days in two months yesterday when heavy selling from hedge funds put a dramatic end to the yen's week-long damaging slide. In a surprise move, hedge funds - which have often been blamed for exacerbating weaknesses in foreign exchange markets - pulled the dollar off its New York close on Monday of 146.08 yen, sending it tumbling 2.3 per cent to a low of 142.65 yen. "A couple of big orders came through out of the US and crossed the market when it was long of dollars," said Standard Chartered chief treasury economist Tim Fox. The selling, which is not thought to have been by George Soros' Quantum Fund or Julian Robertson's Tiger Fund, stunned the market, which had taken the yen to as low as 146.60 yen in New York on Monday. The dollar managed a partial rebound yesterday, but settled cautiously at 144.85 yen in European trading, fearing another onslaught of hedge fund selling. "While the indications so far suggest no actual intervention by the [central] Bank of Japan, the impact the yen has had on Asian markets and the impact on the Dow is triggering some concerns," said Neil Mackinnon of hedge fund advisers Burke and Mackinnon. On Monday, the Dow Jones Industrial Average fell 207.01 points, or 2.3 per cent, to 8,627.93. Japan has come under intense pressure in recent days to halt the yen's decline, which is widely seen putting pressure on the yuan and the Hong Kong dollar. There are fears if either devalue, it could unleash a further round of depreciations and increase the Asian economic depression. The last occasion Japan attempted to boost the yen was in April when it spent almost US$20 billion of its foreign exchange reserves engineering a dramatic 5 per cent correction in the currency. Yesterday, Japan's Prime Minister Ryutaro Hashimoto reiterated to Parliament that he was determined to stand by an earlier pledge not to trigger a global recession. Finance Minister Hikaru Matsunaga repeated the government was "strongly concerned" about the yen. Bank of Japan governor Masaru Hayami also tried to calm the markets, saying currencies always corrected themselves if movements became excessive. He claimed the weaknesses in other Asian currencies were not solely due to the decline in the yen but admitted the continuing fall in the currency would attract international criticism. "If things stay as they are, there is a possibility that there will be complaints from the United States and other nations that Japan is exporting too much." Strategists predict the yen is poised to weaken again in the coming days and Mr Fox believes the dollar could leap through 147 yen by the end of the week, but will not go much further unless fresh news emerges. "I think we need new factors to break new levels," he said. Japan is scheduled to hold upper house parliamentary elections next month and most strategists believe there are unlikely to be any fresh measures to stimulate the economy further until after the elections. Yesterday Mr Hayami said the central bank policy board had considered adjusting guidelines for overnight call rates by lowering the reserve requirements of private banks in a bid to inject liquidity into the system, but decided to wait for the 16 trillion yen (about HK$846.88 billion) economic package announced by Japan earlier this year to take effect.