To whom...,
Late night reports of official Japanese reaction to the G7
communique on for-ex make the Japanese mind-set a little clearer. Either
they are playing it extremely cute or they are living in a dream world.
The latter seems more likely. The communique quite clearly emphasized the
view that the Yen should be strengthened through Japanese internal
economic policy. While it left open the possibility of concerted
intervention, it did so only in the case of imbalances in the market. The
Japanese officials, however, emphasized the very small opening left for
concerted intervention and expressed surprise that Japan's situation was
the focus of so much discussion. I fear these guys are living in a
fantasy where staying the course will produce renewed Japanese economic
strength. That seems to include staying the strong Yen course, but the
BoJ seems to be alone in that effort whether it knows it or not.
The Yen was bid to as low as 131/dollar, but moved back up a bit
to around 130. It's 2:00 a.m. EST and the trend on Globex has been
bearish since I first checked it at midnight, however no break-out is
evident at the moment and I don't know what the actual exchange rate was
at midnight since I was getting the June future. Reuters reported of a
poll of economists which was interesting, showing a bearish trend on the
Yen despite BoJ intervention and suggesting that Yen outflows could offset
downward pressure on dollar/Yen caused by the current account deficit. It
is a brave new world in Tokyo.
peace
