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

To: Lucretius who wrote (28033)	3/26/1999 8:26:00 AM
From: MythMan	Read Replies (1) \| Respond to of 86076

Currency stuff off of Bloomberg... >>Fri, 26 Mar 1999, 8:20am EST Dollar Rises vs Yen, Near 2-Week High, as Japan Seen Stemming Yen's Climb Dollar Rises vs Yen; Japan May Try to Curb Yen Gains (Update4) (Updates prices.) London, March 26 (Bloomberg) -- The dollar rose against the yen for a second day, climbing to a near two-week high on expectations Japan will buy dollars to keep the yen from rising too far. Japanese government officials have said almost every day this week that a strong yen, which erodes exporters' earnings, is undesirable. The yen rose to a one-month high of 116.88 yen per dollar Monday as stocks rallied and firms brought home overseas earnings to reflect gains before fiscal year-end on March 31. ''Japanese officials are concerned about the knock-on effect that yen strength may have on any incipient recovery,'' said Keith Edmonds, chief currency analyst at IBJ International. ''They're relatively content with the yen in a range between 115 yen and 120 yen per dollar.'' The dollar rose to 119.31 yen, up from 118.04 yen late yesterday in Europe. It's likely to trade between 117 yen and 120 yen in the coming days, said Gerard Lyons, the chief economist at DKB International. ''If the yen appreciates too much, there will be verbal intervention to talk it weaker,'' he said. The U.S. currency rose against the European Union's single currency, driving the euro down to $1.0818 from $1.0866. The euro fell as a report showed that money supply growth in the euro zone is slowing, suggesting inflation pressure is tame and leaving the European Central Bank scope to reduce interest rates. Yen Consternation A rising yen makes the nation's exports more expensive and can hamper efforts to spur growth. Haruhiko Kuroda, director- general of the Finance Ministry's International Finance Bureau, said yesterday Japan will take ''necessary actions'' to stem the yen's rise, though he declined to comment today. Vice Finance Minister Koji Tanami also said yesterday ''an excessive rise in the yen is undesirable.'' ''While Japanese officials are talking up the dollar, people in the currency market can't aggressively sell dollars before the fiscal year ends, on concern that the Bank of Japan may intervene in the market when the dollar falls to about 115 yen,'' said Toshiyuki Takamatsu, senior trader at ABN Amro Bank NV in Tokyo. Some U.S. investors sold dollars earlier this week as Japanese stocks rose. The yen has risen by as much as 5.24 percent since March 4, in tandem with the benchmark Nikkei 225 index, which gained more than 11 percent in the past month. Foreigners need yen to purchase Japanese shares. The euro declined on concern that signs of a slowdown and low inflation in the euro region may prompt the ECB to lower interest rates before long. Inflation At Bay Money supply growth in the 11 nations in European monetary union slowed more than expected to 5.2 percent in February from a revised 5.6 percent in January. The ECB uses money supply growth as an indicator of inflation pressures. The ECB benchmark interest rate is 3.0 percent, compared with 4.75 percent in the U.S. Speculation about lower ECB rates was reinforced yesterday after a report showed consumer prices in the 11-nation euro region rose an annual 0.8 percent in February, leaving the rate well below the central bank's ceiling of 2 percent. ECB executive board member Eugenio Domingo Solans yesterday said the growth outlook for the euro region is worsening. ''Maybe now we're in the 2 percent side of that projection'' of between 2 and 2.5 percent growth in 1999, he said at a press conference at the Luxembourg Central Bank. ''Compared with several months ago, prospects for growth are not as good.'' Euro countries are likely to expand a combined 2.6 percent, the European Commission forecast in October. In January, however, the commission said ''there is evidence'' growth will eventually slow. Fed on Hold In contrast, Federal Reserve policy-makers meeting next week are expected to keep their benchmark lending rate unchanged at 4.75 percent, according to a Bloomberg News survey of the 30 firms that deal directly with the Fed's securities trading desk. The euro also was held back as the North Atlantic Treaty Organization continued an attack on Yugoslavia aimed at ending civil conflict in the Kosovo region. Some currency traders speculated protracted fighting in the region may increase euro- region budget deficits, sour some investors on euro-denominated assets and boost the dollar's haven allure. Still, the outlook for the euro could brighten in the coming days, now that European Union leaders have hashed out a seven- year budget agreement and appointed a new European Commission head. The moves helped smooth over the political disarray that resulted from the surprise resignation last week of the entire commission amid allegations of mismanagement and cronyism. ''If there's chaos, or at least disagreement, among European politicians, then it makes for a difficult environment for the ECB to operate effectively,'' said Edmonds at IBJ. This week's agreement ''allows the EU to move forward.'' <<