TOKYO - The dollar was firmer in midafternoon trade, recouping earlier losses made on the Bank of Japan's plans to buy shareholdings from banks, with investors waiting for signs of further reform initiatives, dealers said. They said Prime Minister Junichiro Koizumi managed to disappoint those who had hoped his speech in early afternoon would contain more reform details, though investors still expect some announcement to be made this week.
"As scheduled, we will build up a system to accelerate banks' disposals of bad loans so we can solve the problem by 2004," Koizumi told a meeting of business people, simply reiterating existing policy. "The government will announce a deflation package today or tomorrow so we are still waiting for that," Tatsuro Karitani, foreign-exchange manager at Mizuho Corporate Bank, said.
"But I don't think it will be anything special so the dollar may try the upside," Karitani added, also noting longer-term concerns over the central bank's credibility and balance sheet. "Some think it was a dollar-uptrend move but in the short-term the stocks will be very stable so before the statement (on the package), we cannot sell the yen now because it is very firm," he said.
"We were very concerned over the financial system, but now the stockmarket is stable so it's very positive for the yen," he said. //www.afxpress.com