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To: paul ross who wrote (14905)	7/26/1998 8:45:00 AM
From: goldsnow	Read Replies (1) \| Respond to of 116898

Forex market bides time as Obuchi forms cabinet 02:24 a.m. Jul 26, 1998 Eastern By Tamawa Kadoya TOKYO, July 26 (Reuters) - The currency market will give the newly elected head of the ruling Liberal Democratic Party (LDP), Keizo Obuchi, some breathing room as he organises his cabinet and the implementation of economic policies to boost the ailing economy, dealers and analysts said. Dealers said the dollar should move within a range of 137.50 to 142.50 yen next week, as markets kept a close eye on how quickly Obuchi -- seen as a consensus builder -- could pull the party together to implement policies to boost the ailing economy and reform the banking sector. Some analysts regarded Obuchi's landslide victory as a positive for Japanese financial markets. ''Obuchi's win will mean that the likelihood of legislation being passed is better than (if either of) the other two candidates (had won), and will likely prove better for the markets,'' said Kenneth Landon, Deutsche Bank chief strategist. A senior dealer at an American bank agreed. ''The fact that Obuchi won decisively indicated how unified the LDP was, and that was taken favourably.'' While Obuchi is unlikely to provide drastic policy measures, dealers were encouraged that he was the only candidate who had proposed specific numbers -- such as the six trillion yen in permanent tax cuts -- in outlining his economic policies during his campaign. The dollar would likely hold a steady tone next week as currency markets waited for Obuchi to form a cabinet and come up with details on his economic plans. The dollar had stabilised against the yen in Tokyo trade on Friday, after initial gains on disappointment over Obuchi's victory were quickly pared by selling from Japanese and U.S. operators, dealers said. It then rose modestly against the Japanese unit in Friday's New York, trading at around 141.67 yen in late U.S. trade. But there was no doubt that Obuchi was still racing against time as foreign exchange markets had set a deadline of only a couple of weeks to implement his economic policies -- or face another assault on the yen. ''It's a battle against time,'' said Ryosuke Tsuji, senior vice president of the foreign exchange department at Societe Generale in Tokyo. Obuchi, virtually certain to become prime minister because of the LDP's majority in the Lower House of parliament, told his inaugural news conference at the LDP on Friday that his top priority was easing people's concerns about the economy. Another key factor in swaying the yen would be the appointment of a finance minister in the new cabinet due to be formed at the end of the month, dealers said. Speculation that Seiroku Kajiyama, former chief cabinet secretary and second runner-up in the LDP race, would be made finance minister, was seen buoying the Japanese currency. But on Sunday, an LDP parliamentarian close to Kajiyama said the veteran politician, who had called for a ''major surgery'' of Japan's banks and their bad loans, was unlikely to accept the post to head the powerful Ministry of Finance (MOF). Asked if Kajiyama would accept a MOF appointment, the LDP's Shizuo Sato said: ''I don't think he'll take it.'' The yen could also be dragged lower by concerns over Japan's financial system, which continued to lurk, dealers said. Regional Japanese construction firm Asakawagumi Co Ltd (1864.OS) said on Thursday it had filed for court protection from its creditors with debts totalling 60.3 billion yen ($425 million). Meanwhile, Kiyo Bank Ltd, a creditor of Asakawagumi, said on Friday it might not recover loans totalling 15 billion yen made to the failed firm. Separately, rumours of financial difficulties at Taiheiyo Securities Co Ltd, a broker affiliated to the now-defunct Yamaichi Securities, helped lift the dollar against the yen on Friday despite the company denying it faced any troubles. ((Tokyo Treasury Desk +81-3 3432 8027 tokyo.newsroom+reuters.com)) Copyright 1998 Reuters Limited