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

To: MikeM54321 who wrote (8128)	2/25/1999 1:01:00 PM
From: Sam	Read Replies (1) \| Respond to of 9980

Speaking of Japanese repatriation (all bolding is mine): Thursday February 25, 12:38 pm Eastern Time Dollar extends losses vs yen, euro at U.S. noon NEW YORK, Feb 25 (Reuters) - The dollar extended its overnight losses against the euro and yen during New York morning trading on Thursday as traders locked in profits before month-end and Japan's approaching fiscal year-end in March. ''Trading in dollar/yen will probably be choppy for the next weeks,'' predicted Eric Nickerson, chief currency strategist at Bank of America, adding, ''the underlying sentiment for the dollar is still good, but overshadowing that are considerations about month-end and year-end in Japan.'' After seesawing around 120 yen for most of the morning, dollar/yen fell to 119.18/28 at noon, from a 120.45/55 open. The dollar fell to a 118.99-yen low as stop-loss orders put on last week as the dollar steamed ahead were hit, dealers said. Next support is seen at 118.34, but dealers predicted that level would not be hit as the dollar flirted with the lows only briefly. One dealer also said there had been talk that Japan had been selling U.S. Treasuries and the dollar was falling as funds were being moved back to Tokyo. ''That is just a rumor but maybe there is some truth to it, the dealer said.'' Treasuries traded sharply lower at noon and dealers blamed strong U.S. economic data for the decline. Euro/dollar climbed to $1.1058/61 from its $1.1012/15 open. The British pound also rose to $1.6058/68 from $1.6005/15 at the open and $1.5965/75 on Wednesday. The dollar briefly pared overnight losses in early trading after the Commerce Department said orders for U.S. durable goods surged in January at the fastest rate in more than a year, largely because of strong airplane and car orders. Durables orders rose by 3.9 percent in January after rising an upwardly revised 3.4 percent in December, easily outpacing Wall Street's expectations for a 0.2-percent drop. But the dollar soon turned lower as stocks began to fall. (Note: this article is ''in progress''; there will likely be an update soon.)

To: MikeM54321 who wrote (8128)	2/25/1999 3:03:00 PM
From: Robert Douglas	Read Replies (1) \| Respond to of 9980

Mike, You asked what I thought about Japan's efforts at re-inflating their economy by “printing money”. In short, I think it was a necessary step but another in a series that is likely to disappoint. I think it was certainly proper for the government to change their focus from buying long-term government bonds to propping up lenders and businesses. The Japanese bond rates had no business being down as low as they were. One by one, the Japanese are being forced to quit meddling with markets and let them do their job. This will eventually have results, IMO. As for printing money by flooding reserves into the banking system, I am dubious about its effectiveness. It is quite possible that these banks will not loan the money necessary to grow the economy, but rather invest it in paper assets. This, of course, is the weakness of monetary policy, especially in situations like Japan's. A better plan would have included a reversal of the sales tax increase of a few years ago. I have felt for some time now that Japan was not the “gang that couldn't shoot straight” that many portray them to be. My feeling was that they had fallen into the trap of trying to run a more “humane” version of capitalism, something that many advocate, but never recognize as the source of the problem. The Japanese have tried to protect the old guard and are scared to stimulate the economy in fear that inflation would rob the savings from those who built Japan's economy. Perversely, the decline in asset prices seems to have raised this level of fear rather than prodding them to action. My faith lies in the workings of markets and democracy. The markets or the people will one day force change. I believe that Japan has knowingly given up their position of the leader in Asia. Someone else will take their place and this painful transition will be complete. Japan will follow Asia into recovery, not lead it. -Robert