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To: Bobby Yellin who wrote (13817)	6/26/1998 8:33:00 AM
From: Henry Volquardsen	Respond to of 116779

Bobby, I posted this on another thread in response to a question about wether it would be to Japan's advantage to depreciate the yen Message 4994771 in addition in regards to your specific points: The bulk of Japanese debt is yen denominated. Given the low level of Japanese interest rates, the huge size of the Japanese capital market and the currently limited foreign appetite for Japanese credit, Japanese borrowers have largely funded in yen. As a consequence they won't benefit from yen weakness. The banks have a lot of non yet, particularly dollar, borrowings but these are all funding dollar assets. So they won't benefit on debt. Where yen weakness would benefit them is on export growth. And this is very tempting to them. But as I say in the above post they are concerned that US banks and insurance companies would use the weak yen to buy up much of the banking system at discount prices. Henry

To: Bobby Yellin who wrote (13817)	6/26/1998 9:02:00 PM
From: goldsnow	Read Replies (2) \| Respond to of 116779

US says it may not support the yen again By Hugh Davies in Washington and Juliet Hindell in Tokyo ---- A WEEK after America's multi-billion dollar intervention in the currency markets to support the Japanese yen, the Clinton administration signalled yesterday that, with the initiative apparently failing, it would not automatically repeat the process. Lawrence Summers, the Deputy Treasury Secretary, spent the day stepping up the pressure on the Japanese government to meet its promises on economic and banking reform, saying Tokyo needed to "take concrete and early action". After briefing the Senate Foreign Relations Committee on the crisis, he urged Japan to take advantage of the "window of opportunity", saying that it "won't always" be open. Asked if the US might help again to save the yen, he was guarded, and said: "We are prepared to intervene when it is appropriate, and not intervene when it is inappropriate." Global speculators took the hint, renewing their assault on the beleaguered currency. The yen moved back towards the eight-year, pre-intervention low, although analysts pointed out that traders had been "burned before" by Treasury Secretary Robert Rubin's word to Congress earlier this month that intervention only worked temporarily. This sent them rushing to sell the Japanese currency, giving him an opportunity to take the market by surprise. A lack of new initiatives has made the markets nervous and undermined confidence in the Japanese currency. The yen slid yesterday to below 141 to the dollar. Last week's brief upturn had the yen lingering at a rate of around 136 for a day or so. Japan has done its best to reassure the world that it has the situation in hand. In particular, officials said last Monday that they would soon announce a plan to rescue the country's troubled banks. The government said it would come up with a plan before the upper house elections on July 12. But since then there have been no firm details. Taku Yamasaki from the ruling Liberal Democratic party, who is overseeing the bank plan, said Japan would do "major surgery which would result in massive bleeding" in the banking sector. Part of the problem is the widely differing estimates of just how large the bad loans the banks hold are worth. In self assessment the banks admitted to about 625 trillion yen (œ315 billion) of outstanding loans. But the authorities have made a lower estimate. However large the bad loans are, they represent a huge obstacle to economic recovery as they prevent banks from taking on new loans. Yesterday Japan's Long Term Credit Bank at last confirmed rumours that it was seeking a merger partner to prevent collapse caused by huge unrecoverable loans. The steady decline of the yen begs the question, when will the rest of the world deem it fit to intervene again? The G7 industrialised nations and other Asian nations agreed last weekend in Tokyo to intervene if appropriate. Timing may be closely linked to President Clinton's visit to China. Beijing urged Tokyo and Washington to shore up the yen last week saying it would have to devalue its currency, the renminbi, should the yen fall any further. But so far there have been no hints from Japan that more intervention is on the cards and analysts say that Tokyo should not count on America for help. telegraph.co.uk

To: Bobby Yellin who wrote (13817)	6/27/1998 9:57:00 AM
From: long-gone	Read Replies (1) \| Respond to of 116779

China friend or foe: dailynews.yahoo.com

To: Bobby Yellin who wrote (13817)	6/27/1998 7:11:00 PM
From: goldsnow	Respond to of 116779

Kuwait wants to borrow, raise prices 02:11 p.m Jun 27, 1998 Eastern By Ashraf Fouad KUWAIT, June 27 (Reuters) - Kuwait said on Saturday the time had come for the Gulf oil-producing nation to adopt such economic policy changes as borrowing to cover budget deficits and reductions in state subsidies. ''The financial policy must be gradually steered to depend more on local financial markets to finance arising budget deficits rather than full dependence on (state) foreign reserves,'' the Finance Ministry said in a 74-page analysis of the economy and hardships incurred as a result of weak oil prices. International banks are not allowed to operate in Kuwait, which finances budget deficits from its reserves. The analysis, which was sent to parliament on Saturday, said the policy switch would help the market develop domestic assets and create new vehicles to absorb private funds otherwise sent abroad. Reuters obtained a copy of the report. Kuwait has around $70 billion invested abroad while Kuwaitis have a similar amount in overseas accounts, economists say. But, despite several sobering calls contained in the report, the Finance Ministry has left estimated oil income in the proposed 1998/99 budget starting July 1 unchanged at 2.577 billion dinars ($8.41 billion). Earlier this week the government amended the draft budget. It cut spending by 450 million dinars to 4.41 billion dinars and the net deficit was trimmed to 1.596 billion dinars. The latest report said oil revenue was calculated at $12 a barrel, for an OPEC output quota of 2.19 million barrels per day, a production cost of 400 fils a barrel and an exchange rate of 302 fils to the U.S. dollar. But earlier this week Kuwait pledged at an OPEC meeting a 100,000 bpd cut for a year as of July 1 on top of a 125,000 bpd cut in April as part of an effort by oil exporters to try and push world prices back up from recent 10-year lows. Also the average price for Kuwaiti crudes is currently below the $12 assumption and the $13 a barrel estimate used in the current 1997/98 budget to end-June. Although the report called for a series of measures to lessen dependence on oil, it left non-oil revenue in the new budget unchanged at 550 million dinars. The report said efforts in recent years to boost non-oil income were insufficient, adding that salaries represented 66 percent of the cost of supplying some state services. It said while the cost of providing government services rose to 2.55 billion dinars in 1997 from 1.81 billion in 1989, rates and fares have remained almost unchanged at 225 million dinars. The report called for trying to cut crude production costs and gradually boosting non-oil revenue ''through measures which include speeding up the passing of needed laws to start charging for some services, not just as a source of income, but, more importantly, to rationalise use and cut production cost. ''In addition to raising the price of some subsidised goods and collecting tariffs on some services,'' it added. Last year parliament cut non-oil revenue in the 1997/98 budget for assuming a rise in rates for some basic services. ''There is a dire need for cooperation between all concerned bodies to exert intensified efforts to fill the gap created by a cut in public expenditure by increasing the activity of the private sector and encourage its domestic investment spending... ''Passing the privatisation law and implementing it will be a turning point and a main step towards that goal,'' the analysis said of a draft law before parliament which could lead to privatising the heavily subsidised public utilities. Such companies -- which supply basic services like power, water, telecommunications and other services -- are also used as employment centres for Kuwaitis who enjoy a generous, income tax free, cradle-to-grave welfare system. More than 90 percent of working Kuwaitis are employed by the state, which is projected to spend more than half of its 1998/99 forecast oil income on salaries. The number of Kuwaitis working for the state rose by 41.7 percent by January 1998 from 1992 to 95,100 people. Some 60 percent of Kuwait's 2.2 million population are foreigners. The report said the budget surplus in the first 10 months of the current fiscal year was about 411 million dinars. ''But for 1998/99, the situation could be different as world oil prices are still leaning towards a decline...,'' it added. ($1 - 0.3066 dinars) ((Kuwait Newsroom, +965 240 8945)) Copyright 1998 Reuters Limited. All rights reserved