Ramsey
25-10-2002, Fri 12:19 PM
Yen Gains as Market Adjusts Ahead of Plan
Friday October 25, 4:01 AM EDT
By Carolyn Cohn
LONDON (Reuters) - The yen strengthened by half a percent to a two-week high against the dollar on Friday, as the market adjusted positions ahead of a report on cleaning up Japanese banks' bad loans expected next week.
Financial Services Minister Heizo Takenaka on Tuesday delayed releasing an interim version of the bad loan report. The final plan is now due on Wednesday along with a broader economic package and is expected to put downward pressure on the yen.
The market had initially been short of yen in anticipation of the report, but was closing out some of those positions, analysts said.
"People had expected this massive announcement which would cause huge yen weakness straightaway, but they've backed away from that so some of the weaker (dollar) longs have gone," said Lee Ferridge, currency strategist at Rabobank.
The dollar was trading around 123.80 yen at 0730 GMT. Traders in Tokyo said exporters' selling as well as stop-loss sales pushed the greenback to a low of 123.60, down more than a yen from session highs.
The yen also gained a half percent on the euro to 121.05, but held clear of a two-week peak of 120.64 set on Thursday.
Many players have said bank reforms in Japan would be negative for the yen, given that they could depress the economy by spurring mass bankruptcies and unemployment, adding deflationary pressures.
Japanese Finance Minister Masajuro Shiokawa said in early European trade that bold steps would be needed if bad-loan disposal was to be speeded up, but the Ministry of Finance would provide funds for a safety net for jobs.
The euro approached the week's high against the dollar around $0.98 following a loss of more than two percent in the Dow Jones industrial average on Thursday.
U.S. stock index futures were indicating a weaker open on Wall Street on Friday.
U.S. durable goods orders, due at 1230 GMT, are forecast to show a decline of 1.8 percent in September from a 0.4 percent decrease in August.
The University of Michigan releases its final October consumer sentiment index at 1345 GMT, forecast to give a reading of 81.1 compared with 86.1 in the final September report.
Leaders of the 15 European Union nations, meanwhile, attend the second day of the meeting on enlargement of the bloc on Friday.
MONETARY EASING?
Analysts who have watched Japan make several past attempts to push through reforms, only to disappoint, said a reform program would hit Japan's currency.
"I expect Japan to go through with Takenaka's proposals for bank reform, and that would be negative for the yen," said Toru Umemoto, currency strategist at Morgan Stanley in Tokyo.
"If we see further monetary easing from the Bank of Japan and an increase in fiscal spending, that would bode ill for the yen as well," he said.
The Bank of Japan's policy-setting board also meets next Wednesday.
Some have said that by-elections this weekend could sway the direction for reform, but many were doubtful.
Some argued that if the ruling Liberal Democratic Party manages to win four or more of the seven seats, it would give Prime Minister Junichiro Koizumi the ammunition to fight anti-reformers within his party and back bold bank reforms.
On Friday, Koizumi reiterated his support for Takenaka's plight to speed disposals of banks' bad loans.
But most market players suspected Takenaka was already leaning toward compromise with anti-reformers and banks.
©2002 Reuters Limited. المصدر (http://money.iwon.com/jsp/nw/nwdt_rt_top.jsp?cat=TOPBIZ&feed=bus&src=202§ion=news&news_id=bus-n25378739&date=20021025&alias=/alias/money/cm/nw)
Friday October 25, 4:01 AM EDT
By Carolyn Cohn
LONDON (Reuters) - The yen strengthened by half a percent to a two-week high against the dollar on Friday, as the market adjusted positions ahead of a report on cleaning up Japanese banks' bad loans expected next week.
Financial Services Minister Heizo Takenaka on Tuesday delayed releasing an interim version of the bad loan report. The final plan is now due on Wednesday along with a broader economic package and is expected to put downward pressure on the yen.
The market had initially been short of yen in anticipation of the report, but was closing out some of those positions, analysts said.
"People had expected this massive announcement which would cause huge yen weakness straightaway, but they've backed away from that so some of the weaker (dollar) longs have gone," said Lee Ferridge, currency strategist at Rabobank.
The dollar was trading around 123.80 yen at 0730 GMT. Traders in Tokyo said exporters' selling as well as stop-loss sales pushed the greenback to a low of 123.60, down more than a yen from session highs.
The yen also gained a half percent on the euro to 121.05, but held clear of a two-week peak of 120.64 set on Thursday.
Many players have said bank reforms in Japan would be negative for the yen, given that they could depress the economy by spurring mass bankruptcies and unemployment, adding deflationary pressures.
Japanese Finance Minister Masajuro Shiokawa said in early European trade that bold steps would be needed if bad-loan disposal was to be speeded up, but the Ministry of Finance would provide funds for a safety net for jobs.
The euro approached the week's high against the dollar around $0.98 following a loss of more than two percent in the Dow Jones industrial average on Thursday.
U.S. stock index futures were indicating a weaker open on Wall Street on Friday.
U.S. durable goods orders, due at 1230 GMT, are forecast to show a decline of 1.8 percent in September from a 0.4 percent decrease in August.
The University of Michigan releases its final October consumer sentiment index at 1345 GMT, forecast to give a reading of 81.1 compared with 86.1 in the final September report.
Leaders of the 15 European Union nations, meanwhile, attend the second day of the meeting on enlargement of the bloc on Friday.
MONETARY EASING?
Analysts who have watched Japan make several past attempts to push through reforms, only to disappoint, said a reform program would hit Japan's currency.
"I expect Japan to go through with Takenaka's proposals for bank reform, and that would be negative for the yen," said Toru Umemoto, currency strategist at Morgan Stanley in Tokyo.
"If we see further monetary easing from the Bank of Japan and an increase in fiscal spending, that would bode ill for the yen as well," he said.
The Bank of Japan's policy-setting board also meets next Wednesday.
Some have said that by-elections this weekend could sway the direction for reform, but many were doubtful.
Some argued that if the ruling Liberal Democratic Party manages to win four or more of the seven seats, it would give Prime Minister Junichiro Koizumi the ammunition to fight anti-reformers within his party and back bold bank reforms.
On Friday, Koizumi reiterated his support for Takenaka's plight to speed disposals of banks' bad loans.
But most market players suspected Takenaka was already leaning toward compromise with anti-reformers and banks.
©2002 Reuters Limited. المصدر (http://money.iwon.com/jsp/nw/nwdt_rt_top.jsp?cat=TOPBIZ&feed=bus&src=202§ion=news&news_id=bus-n25378739&date=20021025&alias=/alias/money/cm/nw)