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To: Alex who wrote (26008)	1/12/1999 11:07:00 AM
From: long-gone	Respond to of 116759

<<FRANKFURT, Jan 12 (AFP) - The European Central Bank (ECB) said on Tuesday that its net foreign currency reserves increased by 1.3 billion euros>> Now, that should make the Euro stronger, I noted they said NET reserves. They just don't understand the American usage of English well enough, should have been "dot-com" reserves.

To: Alex who wrote (26008)	1/12/1999 10:23:00 PM
From: PaulM	Read Replies (1) \| Respond to of 116759

Alex, too interesting to leave now. ECB added $1.5 bill in foreign exchange. That must mean they were selling Euros for something. Given that Japan visited Europe earlier in the week to make sure that the Yen isn't eclipsed by the two bigger boys on the block, any guesses as to what currency the ECB bought? The Euros obliged (for altruistic reasons of course) and bought yen for Euros. (Also explains the weakness in the Euro). But Japan quickly learned a lesson. The ECB yen buying triggered another hedge fund unwinding--hedge funds are probably endlessly short yen (and gold)--given multi year yield differentials between those assets and U.S. yields. (Press accounts to the effect that the stronger yen results from improved "sentiment" toward Japan is an obvious joke). Days later, Japan itself was weakening the currency it had promoted five days earlier! Japan must now realize that to a large extent--because of its dependence on exports to the U.S.--its exchange rate is inextricably tied to the dollar. (Not a good position for a country sumlutaneoulsy concerned with the strength of its currency). As for the Euros, they will not overtly ruin U.S., Japanese currencies, though that is the expected result. The markets--and in particular Wall Street and the hedge community--will do that job for them.