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Pastimes : The Naked Truth - Big Kahuna a Myth -- Ignore unavailable to you. Want to Upgrade?

To: MythMan who wrote (9708)	10/29/1998 8:54:00 AM
From: Cynic 2005	Respond to of 86076

GoldmanSucks Defects from the BullCamp? et tu, Brute? Wednesday October 28, 11:30 pm Eastern Time Official US asset buying no support to dollar-Goldman NEW YORK, Oct 28 (Reuters) - The dollar will remain under pressure despite evidence that increased foreign central bank buying of U.S. assets has countered the recent reluctance of private global investors, according to Goldman, Sachs & Co. In The Weekly Analyst report dated October 27, Goldman noted that official custody holdings of Treasuries at the Federal Reserve have risen by $16.5 billion in the four weeks ended October 21 -- the largest adjusted rolling monthly addition to foreign holdings since March 1997. Dependence on official buying is worrisome amid the United State's growing reliance on foreign capital to finance a record current account deficit, it said. ''Intuitively, this means the United States must finance its growing current account deficit with speculative portfolio flows, rather than through more stable foreign direct investment,'' Goldman said. It also said the official buying coincided with the sharp dollar selloff and may reflect a desire to slow the erosion in the greenback's value. A big upturn in official buying of U.S. assets between 1995 and 1997 was largely motivated by a desire to drive up the value of the dollar, Goldman noted. ''Perhaps, Asian and European central banks are unwilling to tolerate too rapid currency appreciation (and a tightening of their domestic monetary conditions) so they stepped in to fill the financing gap,'' Goldman said. Goldman contended dollar volatility will remain high as stress on financial institutions remains a global investment theme -- despite the apparent willingness of foreign central banks to offset swings in private investment. It recommended staying short dollar/mark, looking for a retest of the 1.5875 20-month low and, ultimately, for a fall to its three-month forecast of 1.48. Dollar/yen should be sold at 122, or on a one-day close below 115 for a possible test of the 109 level. biz.yahoo.com