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To: IQBAL LATIF who wrote (20090)	9/7/1998 3:33:00 AM
From: flickerful	Respond to of 50167

US: Dollar slides as US begins to feel the heat By Richard Adams in London The strong US dollar - a feature of global markets for the past three years - may finally be on the wane against European currencies. The dollar has benefited from investors looking for a safe haven from market turmoil in Asia and Russia. But with Alan Greenspan, the Federal Reserve chairman, now warning that the US cannot "remain an oasis of prosperity", the chances of a US interest rate cut have increased. "I think it probably is the end of the big rally upwards in the dollar," said Bronwyn Curtis, chief economist at Nomura International investment bank in London. "I think people are now looking at the world impact on the United States." For most of the period since 1995, the dollar has been strong against the D-Mark and other European currencies. It reached a high of DM1.86 at the end of last year, and fell 10 pfennigs before recovering to above DM1.83 this year. But in recent days, the dollar has lurched downwards. Last week the dollar slipped by eight pfennigs to its lowest level against the D-Mark this year, to below DM1.72. "In the short term, there will still be some safe-haven buying of the dollar. But there are more negative factors weighing on it," said Tony Norfield, global head of treasury research at ABN Amro bank. The fall was sparked by what currency analysts call "technical factors" - too many people who had bought dollars suddenly wanted to unload them. Other short-term factors included the desire by Japanese institutions to cash in their dollar assets and exchange them for yen. US hedge funds have been selling assets to cover margin calls and losses abroad. The dollar has also developed a link to the US equity market. It is usually closely tied to the market for US government bonds, or Treasuries. But Mr Norfield said the past year has seen big inflows into US equities from abroad. "Wobbles in the equity market are going to make a lot of overseas investors sick," Mr Norfield said, especially those already sitting on substantial emerging market losses. "It does indicate a far greater exposure of the dollar to equities than previously," he said. Further equity weakness would reinforce the flight out of the dollar. At the same time, the market has sharply increased its estimate of a likely US rate cut. The futures market has priced in a 0.5 per cent cut in the Federal Funds rate by May next year. Signs of a slowdown in the US, and a recovery in Germany, will shift the tide in favour of the D-Mark. That in itself may be good news, as a weaker dollar takes some of the pressure off the emerging market currencies. A weaker dollar also helps to bring forward a recovery in commodity prices - which are largely denominated in dollars - boosting the currencies of Latin America as well as South Africa, Australia and Canada. ft.com

To: IQBAL LATIF who wrote (20090)	9/7/1998 3:38:00 AM
From: flickerful	Respond to of 50167

HK stocks surge in afternoon after govt measures HONG KONG, Sept 7 (Reuters) - Hong Kong stocks pushed ahead in Monday afternoon trade with the Hang Seng Index surging 623 points, or 8.32 percent, to 8,111 points after the government proposed changes to rules governing stock and futures markets. Short-covering continued in the afternoon on a strengthening yen as well as the government's measures, which would tighten controls on short-selling, brokers said. The yen rose to 131.85/95 to the U.S. dollar from a low of 134.67 earlier on sales by U.S. hedge funds and a surge in Tokyo stocks. The Nikkei 225 average jumped 747.15 points, or 5.32 percent, to close at 14,790.06 on Monday. ''Hedge funds might suffer losses in various markets in Russia, South America and Malaysia,'' said Sean Li, associate director at Amsteel Securities. ''What they can do now is follow the rise of the market and cover their short positions in the current situation,'' he added. The Hang Seng Index rose 700.96 points, or 9.36 percent, to a session high of 8,189.43 in early afternoon before steadying at 8,091, up 603 points, or 8.06 percent. The government announced a series of measures on Monday morning to strengthen order and transparency in the territory's securities and futures markets which would make Hong Kong more resilient to speculative attacks against its currency. ''They are trying to break the chain -- the attack on the currency thing and also the stock borrowing thing,'' said Howard Gorges, a director at South China Brokerage. ''Apparently our rates were really too high. These new measures, it seems, makes it more difficult to shift the interbank rate,'' he added. Hong Kong's overnight interbank rate stood at 3.62-4.12 percent at midday, down from its Friday close of 4.00-6.00 percent, although it was slightly up from an open of 3.00-3.50. The three-month rate was 8.37-8.87 percent against 11.00-11.50 percent on Friday. The Hong Kong Monetary Authority announced a seven-point plan on Staurday to improve liquidity in the banking system as part of the government's effort to support the Hong Kong dollar. ''The (stock) market should remain quite firm on the back of these measures but it is likely to be giving up a bit of ground and then it will be subject to overseas influences,'' Gorges said. (Note: this article is ''in progress''; there will likely be an update soon.)