Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (14730)	7/20/1998 7:21:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116763

Dollar Falls Against Yen As New Japanese Leader Seen Boosting Reform Dollar Falls vs Yen; Japan Leader Seen Backing Reform (Update1) (Updates prices.) New York, July 20 (Bloomberg) -- The dollar fell a third day against the yen after the three top candidates for Japanese prime minister said they would redouble efforts to end the country's recession. Foreign Minister Keizo Obuchi, former chief Cabinet Secretary Seiroku Kajiyama and Health and Welfare Minister Junichiro Koizumi said the government must suspend legislation to reduce the country's deficit and spend more to revive growth. ''People are hoping that whoever gets in will do something more radical'' to get the economy on track, said Mike Casey who manages $400 million in global bonds at Federated Investors. That's boosting the yen, he said. In late New York trading, the dollar fell to 138.89 yen from 139.48 yen Friday in New York. The U.S. currency has fallen 5.4 percent since reaching an eight-year high June 16, the day before the U.S. and Japanese governments jointly sold dollars to defend the yen. Still, the dollar is up 6.5 percent since the beginning of the year. The dollar was little changed at 1.7817 marks from 1.7802, after falling to a six-week low, amid signs German growth may accelerate while the U.S. economy could soon lose steam. Traders and investors warmed to the yen after the prime minister hopefuls all said they would speed a cleanup of the banking system, beset with an estimated 77 trillion yen ($554 billion) in problem loans. Reforms Promised The candidates also promised tax cuts and more government spending aimed at pulling the world's second-largest economy out of its worst post-World War II slump. ''The yen could recover to 135 if the market likes the new prime minister,'' said John Wills, managing director of John Hancock Advisers International Ltd. in London, which has $500 million under management. ''I'm fairly hopeful on reform.'' The ruling Liberal Democratic Party will choose between them Friday for party president. The winner is a shoo-in for the prime minister post because the party controls the lower house of parliament. To be sure, some strategists and traders remain bullish on the dollar, noting that it will take months before the new leader can turn the economy around. ''These are not the men who will lead Japan out of the problems it faces,'' said Jeremy Fand, a currency strategist at BankBoston in Boston, who sees the dollar rising to 150 yen by the end of August. ''The market has an unrealistic sense of confidence that (Prime Minister Ryutaro) Hashimoto's resignation will somehow force Japan to enact a new economy-boosting effort.'' In the quarter ended March 31, Japan's economy officially slid into recession. That, combined with LDP losses in the July 12 parliamentary election, prompted Hashimoto to resign a week ago. Mark Bulls The dollar hovered near a six-week low against the mark amid expectations German growth is picking up and talk that the U.S. economy is poised to slow. ''The mark should be appreciating and the dollar depreciating,'' said Federated Investors' Casey. ''U.S. second- quarter growth may slow down, while we've still got momentum in Germany.'' A pickup in Germany's economy and a cooling in the U.S. could mean the spread between U.S. and German interest rates, which propelled the dollar 17 percent versus the mark last year, will start narrowing. The yield on the U.S. 10-year Treasury bond is currently 5.48 percent, 80 basis points more than comparable German bonds. The head of the German government's panel of economic advisers said growth will ''clearly'' exceed 2.5 percent this year. ''It's positive that the growth momentum that until now was predominantly from exports is now slowly feeding into domestic demand and investment,'' Herbert Hax told the newspaper Die Welt. Hax's forecast is in line with the German government's, which predicts growth of between 2.5 percent and 3 percent this year, up from 2.2 percent in 1997. Exports surged last year as the mark weakened, encouraging companies to crank up investment this year. Adding to growth optimism, the jobless total could fall under the 4 million level ''in the autumn,'' Federal Labor Office President Bernhard Jagoda said in an interview to appear in tomorrow's edition of the business newspaper Handelsblatt. In June, the number of unemployed fell to 4.075 million from 4.197 million in May. Greenspan The dollar could be depressed in coming days if Federal Reserve Chairman Alan Greenspan suggests the U.S. economy may be losing steam in semi-annual testimony before Congress. That would reinforce expectations U.S. interest rates won't rise any time soon. ''He might say the fundamentals are not as dollar-favorable as they used to be,'' said BankBoston's Fand. That could prompt a ''sell-off of dollar-yen.'' To be sure, if his testimony before a Senate panel tomorrow and a House subcommittee Wednesday touches off gains in bonds, it could take the dollar higher. Global investors need the U.S. currency to pay for the bonds they purchase. In a sign growth may be slowing, the U.S. trade deficit in May rose to its highest level since 1992, when the government began tracking monthly goods and services trade. A wider trade deficit leaves more dollars in the hands of foreign exporters to sell for their own currencies when bringing revenue home. ''Growth is slowing down a little in the U.S.,'' said Gerry Celaya, the senior currency analyst at American Express Bank in London, who expects the dollar to fall as low as 1.70 marks over the next three months. ''It's time to switch from dollars into marks and ride the currency that's going to see more growth.'' Elsewhere, the British pound rose to $1.6479 from $1.6447 Friday. The dollar was little changed at 1.5060 Swiss francs from 1.5025 francs, at 5.9750 French francs from 5.9732 francs and at 1757.30 Italian lire from 1756.60 lire. The dollar was also little changed at 1.4890 Canadian dollars from 1.4884. bloomberg.com@@YlzY2gYAEtorbv*j/news2.cgi?T=news2_ft_topww.ht&s=557110792