17 October 2002, 10:31  Forex - Dollar/yen eases late morning Tokyo on speculative unwinding, Nikkei

The dollar/yen eased in late morning trade on continued unwinding of speculative long positions after the recent stabilisation of the Japanese stockmarket and in the face of strong upside resistance, dealers said. The benchmark Nikkei 225 stock index continued to gain this morning, rising above 9,000 points despite sharp losses on Wall Street overnight after recent panic selling that led it down to fresh 19-year lows around 8,200 points.
"We can see Japanese buying some foreign assets but the yen depreciation is mostly speculative," said Koji Fukaya, chief foreign-exchange analyst at Bank of Tokyo-Mitsubishi. "It's been very difficult for the dollar to break 125 yen, especially as the Japanese stockmarket is steady relative to the US. On the upper side, exporters are also waiting to hedge their receivables for the first quarter."
Meanwhile, investors are waiting cautiously to hear more details of the government's plans to resolve the bad-loan problem as well as measures to offset the deflationary economic impact of the reforms. State Minister for Economic and Fiscal Policy Heizo Takenaka said yesterday the taskforce he created to investigate accelerated non-performing loan disposals aims to release its report early next week.
"The lower side is 122 yen and the upper side 125 yen," Fukaya said. Meanwhile, the euro continued lower, after recently hitting a three-year high against the yen, as investors have become less risk averse as the stockmarket steadies.
The euro has taken over the dollar's traditional role as a safe-haven currency due to risks related to an expected US invasion of Iraq. "The stockmarket rebound effected the euro rate. The euro's prefered when investors are risk averse but as stock prices started to bottom, the euro has depreciated," Fukaya said.
He also downplayed comments made by Bank of Japan governor Masaru Hayami yesterday. "Yesterday Hayami said he doesn't think the dollar/yen weakness will continu e but ... policy is decided by the finance ministry," he said, adding the governor's reference to possible monetary easing should also be neutral.
"The BoJ is moving with the government's new measures, including an expansion of fiscal expenditures and new issues of government bonds," he said. Fiscal expansion should in theory push up long-term interest rates, appreciating the yen, while monetary easing would depress the yen.
Members of the government's Council on Economic and Fiscal Policy will today call for a 5 trln yen economic-stimulus package, led by tax cuts and employment-boosting measures, the Nihon Keizai Shimbun reported earlier. ///www.ananova.com

© 1999-2024 Forex EuroClub
All rights reserved