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To: Zardoz who wrote (25628)	1/7/1999 8:54:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 117273

quote.bloomberg.com

To: Zardoz who wrote (25628)	1/7/1999 9:48:00 PM
From: Broken_Clock	Read Replies (1) \| Respond to of 117273

Hutch, US$ skating on the thin edge with 93 on the charts. tfc-charts.w2d.com decisionpoint.com

To: Zardoz who wrote (25628)	1/9/1999 4:16:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 117273

The rise of the yen Tokyo shares have been hit by the rising yen In another surprising start to 1999, it has been the Japanese currency, the yen, that has been the star performer on foreign exchange markets. The yen strengthened sharply against the dollar this week, reaching a 26 month high of ¥110 to the dollar on Thursday - a 35% increase since the summer. Yet in June last year, when the yen tumbled to ¥145 to the dollar as the troubles of the Japanese economy mounted, the US Federal Reserve Bank was forced to intervene to rescue the currency. The Japanese economy is still in recession, although the government has now produced a plan to bail out its debt-ridden banks. And the stronger yen will make it harder for the economy to recover through export-led growth. But the very fact that Japan's recession has forced its government to spend billions in an economic rescue package is helping the yen's rise. It has led to higher interest rates on Japanese Government Bonds (JGBs) which have attracted some investors. The interest rate difference between US government bonds has narrowed considerably. "Japanese investors are finding attractiveness in bonds ... it is the lesser of two evils," commented Kirit Shah of Sanwa International. And the higher interest rates have in turn led to a decline in the speculative "yen-carry trade" which involved hedge funds borrowing in cheap yen and investing in higher-yielding dollar assets. Since the collapse of the LTCM hedge fund in October, this trade has been unwinding. Dollar in trouble But the most fundamental reason for the strengthening of the yen has been the weakness of the US dollar. The US dollar is in trouble - the US has a huge trade deficit with the rest of the world that amounted to more than $200bn (£125bn) in 1998 and is likely to be even bigger in 1999. Both Japan and the eurozone, in contrast, are running big trade surpluses. As long as the US dollar was the reserve currency, the rest of the world was content to buy dollars to finance that deficit. But now there is likely to be a switch into euros as a reserve currency, and the yields on US assets are falling. But if foreigners, who own assets worth 15% of US GDP, sell their US assets, it could hurt the dollar even more. The Japanese vice-minister for international finance, Eisuke Sakakibara, has said he thought the US economy was now "bubble-like" just as the Japanese economy was in the 1980s. The US economy is expected to weaken sharply in 1999, and any further economic crisis in Latin America would hit the US hard. Japanese worried The Japanese government has become increasingly worried about the rise of the yen, but it is not yet sure what it can do about it. Taichi Sakaiya, head of Japan's Economic Planning Agency, said that the yen "is certainly at an inappropriate level." Prime Minister Keizo Obuchi is in Europe trying to get support for a degree of co-ordination on exchange rates following the launch of the euro. On Thursday, he issued a joint statement with President Chirac which called for "a renewed framework for mutual co-operation on exchange markets, including strengthened mutual dialogue on macroeconomic policies." But dealers were sceptical about the prospects for target zones, which are opposed by the US but may be discussed at a G7 summit later in the year. "True stability of the yen in the foreign exchange market can only be achieved by restoring confidence in Japan itself." said Hitoshi Imamura of Nippon Credit Bank. For the moment, the volatility of the yen has been increasing as the currency speculation is increasingly driving its level. Some dealers believe that the launch of the euro made this worse. "Speculators are playing around with the yen more as they had to adopt a more cautious attitude to the new currency," said one dealer at a major Japanese city bank. And trade tensions are also increasing between the US and Japan, notably over steel imports. "Friction is unavoidable, but the issue is how to deal with it," commented Osamu Watanabe, vice-minister at the MInistry of International Trade and Industry. The decline of the dollar, if it continues, could exacerbate trade tensions with Europe and Japan, weaken the worldwide economic recovery, and precipitate a capital flight from the US. It could be one of the most significant economic events of 1999. news.bbc.co.uk