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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Joseph Beltran who wrote (7011)	10/8/1998 10:17:00 AM
From: Henry Volquardsen	Read Replies (1) \| Respond to of 9980

Joseph, most of the dollar/yen volatility is due to hedge fund liquidation and delevering. In fact despite public comments to the contrary the Japanese are very worried about an exchange rate at the 110 level. They will be very hurt if the rate stabilizes at that level. Henry

To: Joseph Beltran who wrote (7011)	10/8/1998 10:20:00 AM
From: Robert Douglas	Respond to of 9980

I'm wondering how much of this dollar/yen volatility is due to hedge funds liquidating the balance of their yen short positions to salvage any type of profit. it doesn't appear that the fundamentals are driving/repsonsible for this extreme of volatility. thoughts/comments? Maybe you should consider that the opposite might be true. Perhaps it was the massive hedge-fund participation in these yen-carry trades that pushed the currency to an unrealistic level in the first place and now the panic unwinding is returning the currency to a more “fundamentally” sound price. After all it was the ever-lower level of the yen that made these transactions profitable which attracted more dollar buying that drove the yen still lower. Are you surprised that once the music stops there aren't enough chairs for these funds to sit in? These carry trades have been nothing more than a speculation in the decline of the yen, as yesterday's action made clear. -Robert