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

To: Oeconomicus who wrote (208)	6/17/1998 2:38:00 PM
From: Henry Volquardsen	Respond to of 3536

My day is going pretty well actually ;) I think this intervention is just a holding action (as I said earlier) and it remains to see what mix of solutions we get for the Asian crisis. As far as whether Asian investors will continue to hold dollars; there is not a doubt in my mind that Asian investors as a class consider themselves significantly underinvested in US assets and will continue to find the US an attractive investment environment. Nothing that has happened changes the fundamental attractiveness of the US as an investment environment. There is, btw, no guarantee this intervention will be anything but temporarily effective. No central bank has sufficient capital to actually alter the fundamental trend of a currency. There are real reasons the yen was weakening. For these same reasons it will weaken in the future unless the non Asian economies pursue a debasement (inflation) of their own currencies. Intervention is just central bank guerilla tactics. They only appear to work so dramatically in the short term because speculators tend to go with them for a quick profit.