Mr. Gecko,

The G7 has met and according to the papers I read, not much happened.

I did find it curious that in the Wash Post Today, George will seems to concur with you!!

Your comments would be appreciated

-- David Butts (dciinc@aol.com), September 26, 1999

Answers

wow...I can't imagine this will be good news for the markets tomorrow.

Mike

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-- Michael Taylor (mtdesign3@aol.com), September 26, 1999.

Dow 36000...sorry Dow 6000

-- Ponzi (bubble@pop.October), September 26, 1999.

anon@anon.com), September 26, 1999.

http://dailynews.yahoo.com/h/nm/19990926/bs/economy_yen_1.html

[Fair Use: For Educational/Research Purposes Only]

Sunday September 26 8:52 AM ET

Yen Rise Seen Temporarily Tempered After G7

By Chikafumi Hodo

TOKYO (Reuters) - A rare Group of Seven (G7) statement expressing concern over the recent sharp rise in the yen is expected to bring short-term relief, but the basic bullish trend for the Japanese currency is unchanged, analysts and dealers said Sunday.

The market's attention will now be on Japan's fiscal stimulus plans or extra monetary measures by the Bank of Japan, they said.

``With the word 'yen' included in the G7 statement, the market will be careful about extending yen-buying, especially in a provocative manner. This will limit the yen's rise in the near term,'' said Hitoshi Imamura, deputy manager at Nippon Credit Bank.

The G7 communique did not promise joint intervention in the market but said: ``We shared Japan's concern about the potential impact of the yen's appreciation for the Japanese economy, and the world economy.''

It was rare for a G7 statement to mention a specific currency and even rarer for it to express its concerns. Analysts said it would be enough to stop the yen's rise of about 16 percent since June, at least for now.

``With the yen in the communique, I won't be surprised to see active position unwinding of yen long positions, which could lift the dollar toward 107 to 108 yen,'' Imamura said. The yen closed in New York Friday at 104.15 yen.

The statement also said the G7 nations will continue to monitor developments in exchange markets and cooperate as appropriate.

Mitsumaru Kumagai, senior market analyst at the Industrial Bank of Japan, said that Japan probably promised that it will take aggressive economic stimulus measures as a barter to receive support on the yen in the communique.

The BOJ did appear to open the door to new measures, as well. Bank of Japan Governor Masaru Hayami for the first time said that exchange rates would be a factor in setting monetary policy, a reversal from the central bank's previous stance, and a bank source said that new measures would be explored to ensure that the ``zero-'rate'' policy is ``fully filtered into the market.''

``It is still uncertain whether Japan will take additional monetary steps or whether it will maintain its current credit-easing policy. But I got an impression that the G7 members may be seeking more monetary measures,'' Kumagai said.

Growing prospects for confidence in the Japanese economy had encouraged yen-buying since this summer. It rose as high as 103.20 to a dollar on September 15, its highest level since December 1995.

Japanese authorities have tried to slow the rise with single-handed intervention but with limited success.

Dealers also said the dollar was unlikely to fall sharply in the near term after the key Nikkei shares average's steep decline last week became a major factor prompting investors to unwind long positions in the yen.

One analyst noted that the better Japan does at improving the economy, the worse its yen troubles will become.

``You have to remember that fresh measures that work to boost the economy also certainly will work to support the yen in the future,'' said Takashi Toyahara, deputy manager at Nomura Trust and Banking.

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-- Linkmeister (link@librarian.edu), September 26, 1999.

Like the Yen isn't going to fall due to Y2K? Yeah, Dow 36,000. In the year 2050, maybe.

-- Mara Wayne (MaraWayne@aol.com), September 26, 1999.

The high yen (en daka) is attributable to several factors:

Politics: Some say the US Treasury secretary is indecisive. I think he's under pressure to allow the yen to rise until the end of the quarter to massage the balance of trade reports.

Investment: The foreign investment in Japan is steadily increasing. Buy (invest) low and sell high. The general perception is that Japan has a lower risk of further decline and the greater possibility of improvement. The US has a higher risk of of a massive drop.

Industrial strength Japan manufactures or controls substantial manufacturing facilities throughout the world. People continue to buy products in lean times. The US economy is now service orientented. People and companies selling 'soft' services that are easily discarded in lean times. For example, companies won't be hiring consultants to do 'team-building seminars' or buying the latest buggy software that adds no value.

-- PNG (png@gol.com), September 26, 1999.

I'm with PNG on this. I think that the outcome was a foregone conclusion. This economic stimulus boohaa and talk of intervention is most wonderful, however the big money goes where it wants to go.

USDJPY=X 1 6:49PM 105.2200 105.22

That being said, I'm not willing to say my hunch was correct until I see it fully reflected in the Yen and the Nikkei. Remember, they're not gonna issue a statement saying "Yoohoo...we're planning to intervene over here around Monday at 8 am....feel free to hammer us....."

Certainly a wealth of contradictory headlines to go with it, but the pattern appears clear to me. Anyone with a motive is claiming it worked, meanwhile the guy with the real juice isn't budging an inch. Hayami holds the trigger. The stories tell the story, but you have to read them all and pick out the parts that fit well. Those that don't probably aren't part of the true story. Story number 1 boasts that despite market expectations of intervention, this economic stimulus BS will be enough to fully halt the rise. Story number two tells us a lot, it tells us that any little blip from the half assed attempt to rein in the Yen was short lived in the only place it counts, the market. Story number 3 is the reason that the Yen is again on the rise, the Central Bank ain't gonna play this game. Period. Good for Hayami. Shows balls on his part. Number 4 tells us that until this happens you can sit and watch the dollar fall like a leaf on a chilly october evening.

Again, I think PNG has it straight. This isn't just about the Yen rising, it's also about the perception that we are an asset bubble gently floating in a field of cactus. This will not be a soft landing. Quite the contrary. Unfortunately, as the fool in this market we are the last to know.

For educational and research purposes only:

Number 1 FOCUS-G7 sets stage for reprieve from rising yen (Reuters) (adds market reaction) By Knut Engelmann WASHINGTON, Sept 26 (Reuters) - Major industrial nations set the stage over the weekend for curbing the high-flying yen, which they fear could damage world growth, after winning a long-sought pledge from Japan to inflate its frail economy. The accord reached by finance ministers and central bankers from the Group of Seven nations at their regular fall meeting marked a major turning point in what had become an increasingly desperate battle by Japan to win support for its efforts to arrest the yen's dangerously fast rise against the dollar. - Sep 26 5:46 PM EDT

Number 2 Dollar's G7-inspired gains seen pared in Tokyo (Reuters) WELLINGTON, Sept 27 (Reuters) - After rising more than a yen to nearly 105.50 yen in response to a G7 meeting's attempt to talk the Japanese currency down, the U.- Sep 26 5:32 PM EDT Number 3 BoJ's Hayami says won't target specific forex rate (Reuters) WASHINGTON, Sept 26 (Reuters) - Bank of Japan Governor Masaru Hayami said on Sunday it would be inappropriate for the central bank to target a specific yen exchange rate but he added that exchange rates were an important factor in setting monetary policy because of their effect on the real economy. Speaking through a translator, Hayami told a news briefing he stood by the bank's view that ``the foreign exchange rate itself is not a direct objective of monetary policy. - Sep 26 4:00 PM EDT

Number 4 Japan yen seen reined in, but BOJ must act - analysts (Reuters) By Apu Sikri NEW YORK, Sept 26 (Reuters) - The high-flying Japanese yen will be reined in over the coming weeks by cooperation between Japan and other industrial nations but any sustained slowdown in the yen's gains against the U.S. - Sep 26 4:00 PM EDT

-- Gordon (g_gecko_69@hotmail.com), September 26, 1999.