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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: EPS who wrote (557)	10/16/1998 3:06:00 PM
From: Enigma	Respond to of 2794

Well, I guess these pamphleteers are somewhat given to invective! E

To: EPS who wrote (557)	11/2/1998 4:14:00 PM
From: EPS	Read Replies (1) \| Respond to of 2794

Monday November 2, 3:06 pm Eastern Time FX IN EUROPE-Yen up on bank news, hedge fund talk LONDON, Nov 2 (Reuters) - Speculation that hedge funds have more short-yen positions to unravel and optimism about the pace of Japan's banking sector reform buoyed the yen on Monday. Against the dollar, the yen rose to two-week highs in overnight trade, while against the mark, the yen scaled the heady heights seen nearly eight months ago. ''There are still a lot of yen-financed carry-trades which need to be reversed,'' said Ray Attrill, director of analysis at economic consultancy 4CAST. ''Indications of momentum behind Japan's banking reforms also helped the Nikkei and the yen.'' Analysts said hopes of speedier financial reforms in Japan escalated after talk of a tie up between Fuji Bank, Dai-Ichi Bank and Yasuda Trust, had boosted the Nikkei by 2.86 percent. By 1545 GMT, dollar/yen was at 114.82/92 from a Monday low at 114.35 and versus 116.42/47 in late European trade on Friday. Mark/yen was quoted near session lows at 69.50/60 against 70.39/42 late Friday. The debate over regulation of hedge funds and banks and a statement from the G7 on Friday on vigiliance regarding these institutions has led analysts to believe more unwinding of short-yen positions is in the pipeline. A favourite hedge-fund practice was to borrow yen at low interest rates to exchange for higher-yielding assets such as dollars -- known as yen-carry trade. In a statement to parliament on the G7 communique Britain's Chancellor of the Exchequer Gordon Brown singled out hedge funds for special treatment by domestic and international regulators. He also said the lack of transparency in their dealings was a fundamental problem. German Chancellor Gerhard Schroeder, in the text of a speech he is due to give on a one-day visit to Britain, said financial markets should not have unrestricted freedom. Schroeder will also say that he supports controls on financial markets to curb excessive capital flows and limit risky lending by banks. Rob Hayward, economic adviser at BankAmerica, said a big question mark hanging over dollar/yen was the U.S current account deficit and Japan's trade surplus. Underlying trade flows have great potential to support the yen in the longer-term, he said. ''The U.S. mid-term congressional elections (Tuesday) will not have an impact, if the Republicans, as expected, win a small victory,'' Hayward said. Dollar/mark, choppy around 1.6500 for most of the session, dipped a little after Bundesbak council member Juergen Stark warned high budget deficits could force the European Central Bank (ECB) to react with interest rate rises. ''The mark got a little bit of a boost from the Stark comments,'' Attrill said. The ECB and Bundesbank councils meet on Tuesday and Thursday respectively. By 1630 GMT dollar/mark was at 1.6507/12 against 1.6555/65 in late European trade on Friday. A weak index released by the U.S. National Association of Purchasing Management (NAPM) had a brief negative impact on dollar/mark. The NAPM index of manufacturing activity fell to 48.3 in October against 49.4 in September. Elsewhere, expectations of lower UK interest rates later this week and a bleak economic outlook pushed sterling/mark to two-week lows at 2.7486. By 1645 GMT it was at 2.7520/30 from 2.7743/48 late Friday. ''There is a chance of an aggressive interest rate cut and this is undermining sterling/mark,'' Hayward said. A fall in the UK manufacturing purchasing managers' index to 41.5 in October from 45.6 in September, the lowest reading since the survey began in January 1992, added to the gloom.