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To: PaulM who wrote (29715)	3/10/1999 8:04:00 PM
From: goldsnow	Read Replies (2) \| Respond to of 116760

Mr Yen's likely departure tipped to unsettle markets By Tony Boyd, Global Markets Editor The management of Japan's international financial relations appears headed for uncharted waters with the likely departure of Mr Eisuke Sakakibara as vice-minister of finance for international affairs. The departure of Mr Sakakibara, also known as Mr Yen, would unsettle financial markets because of uncertainty over whether or not his replacement also would give aggressive support to a stronger yen. Doubt's about Mr Sakakibara's future at the Ministry of Finance comes at a time of rising speculation in financial markets that the US Treasury Secretary Mr Robert Rubin will resign this year and return to Wall Street. Commentators have expressed concern that Mr Rubin, who has supported a strong dollar, will be replaced by his deputy Mr Lawrence Summers, who once supported a weak dollar to resolve a soaring US trade deficit. Speculation about Mr Sakakibara's tenure increased yesterday when the Financial Times said that Professor Takatoshi Ito, had been appointed as his assistant in preparation for the departure of Mr Yen. In keeping with Japanese bureaucratic tradition, Mr Sakakibara's deputy, Mr Haruhiko Kuroda, is the prime candidate to take over the top job. Mr Sakakibara was able to move financial markets with carefully timed jawboning but between 1996 and 1998 he consistently got it wrong on the state of the Japanese economy. He was not afraid to link himself closely with hedge funds and other prominent speculative investors. Mr Sakakibara once helped promote a visit to Japan by the leading hedge fund manager, Mr George Soros, who returned the favour by supporting Mr Sakakibara's comments on the yen. However, in central banking circles Mr Sakakibara's relationship with hedge funds was regarded with deep suspicion. Suspicions arose because heavy hedge fund activity often pre-empted or coincided with official Japanese intervention or jawboning by Mr Sakakibara. "I have no doubt Sakakibara was very close to the hedge funds," said Mr Matthew Poggi, senior economist at Lehman Bros Japan. "He does meet a lot with hedge funds and professional investors and more often than not he calls them to give them his views on where the economy is heading." Although Mr Sakakibara was closely identified with a strong yen policy, his term at the Ministry of Finance from 1996 until late in 1998 coincided with a booming currency play called "yen carry" which delivered extraordinary profits to Japanese and international investors alike. The key to the success of the yen carry trade was the persistent one-sided weakness in the yen which allowed investors to take positions on two sides of the arbitrage portfolio. The departure of Mr Sakakibara will deprive Japan of its best-known face in international finance and likely lead to a return to the traditional stonewalling from Ministry of Finance officials. afr.com.au