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Reuters: Yen Bites All; Japan Swears Off Habit of Manipulating the Yen
By David DeRosa

27/4/2001 9:29 pm Fri

[Perubahan kepimpinan Jepun mula mengheret matawang serantau. Estrada telah ditangkap dan Gus Dur menghadapi pertuduhan rasuah. Ini menyebabkan matawang semakin menurun dan menekan ringgit. Yen kini diparas 123 setelah menteri kewangan baru Jepun, Masajuro Shiokawa memberi jaminan kadar tukaran wang tidak akan dimanipulasikan.

Ini memberi kesannya pada ekonomi Malaysia di mana pelabur akan meninggalkan negara kerana ringgit lebih mahal. Selamat tinggal polisi ekonomi Mahathir... mungkin itulah sebabnya kerajaan begitu banyak betul mengeluarkan 'rancangan' dalam waktu terdekat ini tetapi rezab tetap juga berkurang..... Malah rancangan membaiki Umno pun menyebabkan rezab berkurang juga. Lama-lama Mahathir akan mati aqal nampaknya....
- Editor

Friday April 27, 9:25 AM

Emerging FX-Yen,local leads bite, c.banks eyed

SINGAPORE, April 27 (Reuters) - The yen's retreat and depressing news at home kept Asian currencies on the defensive in early trade on Friday.

The yen headed back below 123.00 after Japan's new finance minister Masajuro Shiokawa indicated exchange rates should not be manipulated.

But wariness of central bank intervention in some regional markets and position squaring ahead of the weekend should limit the downside of most regional currencies, dealers said.

There was talk the Monetary Authority of Singapore defended its currency around 1.8245 late on Thursday -- its fresh decade trough -- amid expectations of M&A outflows.

Currency markets in Jakarta and Manila were also wary of potential intervention after the rupiah crumbled to its lowest level since September 1988 and the peso headed lower after breaking through 15-week lows of 51.00 per dollar on Thursday.

Elsewhere, the Bank of Thailand will publish weekly data on Thai foreign reserves and forward currency swap commitments at 0800 GMT. And Taiwan is due to release data on the March bad cheque ratio at 0540 GMT and the March index of leading indicators at 0800 GMT.


The rupiah was stuck the wrong side of 12,000 as Indonesia's political and economic woes looked set to drag it down again.

It fell to 31-month lows on Thursday ahead of a crucial parliamentary session on Monday, when a second censure against President Abdurrahman Wahid is expected to be debated.

Though a censure over two financial scandals is widely expected, Wahid remains defiant, stoking fears of violent protest by his supporters in the capital next week.

Jakarta dealers said the market was heavily long of dollars, but unwilling to unwind positions ahead of next week's events. Charts showed the dollar/rupiah in overbought territory, with a 14-day relative strength index reading of around 87.

Bank Indonesia vowed on Thursday to continue its support of the currency through intervention and interest rate hikes. But Jakarta dealers said the bank was not in the market on Thursday.

Moreover, dealers and analysts were sceptical as to whether its efforts would stem the rupiah's losses.


The Sing dollar hovered above 1.8190 after the MAS was rumoured to have intervened on Thursday as talk of M&A activities and the ailing rupiah pulled it to fresh decade lows.

But dealers said demand for the U.S. dollar remained fairly strong, with keen buying interest seen on dips to 1.8140/50.

The Sing dollar was weighed by news airport operator Singapore Changi Airport Enterprise had taken a 50 percent stake in British investment and development company Alterra Partners.

There was also talk that two Singapore banks were seeking to buy overseas assets.

"I think the market would be reluctant to push the Sing dollar well below 1.8200 today because of the rumours. But with M&A outflows, the weak yen and the rupiah, it would be hard to see it rise above 1.8150," said a dealer at an Asian bank.


The won fell below 1,320 against 1,313 late Thursday as it tracked the yen, which hit one-week lows against the dollar.

Dealers said local banks were early sellers of won, and bears were encouraged after Korea issued a slew of data on Thursday confirming the economy is in a pronounced slowdown.

The data included the current account surplus that showed a plunge in imports, lower industrial output in March and a lower growth forecast by the IMF.

But analysts said there was less scope for the central bank to aggressively slash rates because of inflation concerns.

A Reuters poll showed Korea's consumer price index is expected to have edged up 0.3 percent on-month and 4.8 percent on-year in April due to a weak won and rising utility fees.

The Bank of Korea left its overnight call rate unchanged at 5.0 percent at its monetary policy meeting earlier this month.


The baht edged down in line with other regionals and on worries about worsening domestic economic prospects.

Dealers said after Thursday's cut in growth and export forecasts by the central bank, the market would now focus on its monthly data on manufacturing production, trade and current account balance due on Monday.

The central bank said exports would grow by 3.0-4.5 percent in 2001, down from an earlier commerce ministry projection of 11.3 percent, and actual growth of 19.6 percent last year.

It also slashed its 2002 growth forecast, widely expected after last week's cut in 2001 growth projections.

However, dealers said the baht's downside was limited given concerns about government plans to raise reporting requirements on forex trade through baht bank deposits held by non-residents.


The peso extended Thursday's fall, hitting an early low of 51.20, on worries about political violence amid street protests against former president Joseph Estrada's arrest on charges of economic plunder - an offence punishable by death.

Growing numbers of Estrada's supporters on the second day of a vigil at a religious shrine in Manila, a kilometer from where he was being held, were likely to unnerve markets.

The central bank said it did not see any speculative activity or capital flight in the peso.

Dealers in Singapore said given rising demand for the dollar as the import season kicked in, political problems would further weigh on the peso.

They said early bids for dollars were seen at around 50.80 while offers by exporters, repatriating dollars for month-end requirements, were likely to emerge around 51.40/50.


The Taiwan dollar was poised to follow the yen lower, nearing the key 33 support level that it last saw on January 5.

While the central bank has been spotted capping the local dollar's gains in recent sessions, it was also believed to be defending the 33 level for now.

However, analysts said recent weak economic data, combined with slowing external demand and heightened export competition, warranted a weaker Taiwan dollar.

Berikut rencana deRosa sebelum keputusan pemilihan pucuk pimpinan Jepun.
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Japan Swears Off Habit of Manipulating the Yen

By David DeRosa

New Canaan, Connecticut, April 20 (Bloomberg) -- Japan's Ministry of Finance has suddenly made a conversion to free-market religion for the yen. Alas, it originates more from political expediency than from endorsement of basic economic principles.

The ruling Liberal Democratic Party could take some heavy hits in elections this year for mishandling the Japanese economy. The Upper House of the Diet, the nation's parliament, will be elected in July. The Lower House and the prime minister will be chosen at the end of September. If the LDP were to lose control of parliament, heads could start to roll at the Ministry of Finance, or MOF.

It is no coincidence that MOF officials have been trying to sound like reformers, of all things. Reformers are the good guys who believe, among other things, that market forces and economic ``fundamentals'' should determine the value of the yen.

Believe it or not, that is what MOF now says it wants for the yen. MOF, it should be remembered, has spent decades trying to manipulate the yen.

So it is of more than passing interest that on Wednesday, Finance Minister Kiichi Miyazawa started talking about the yen and the Group of Seven leading industrialized nations. He said he plans to assure the nations that ``Japan will say it won't take particular artificial steps for the currency market.''

G-7 Jitters

Miyazawa is probably doing a lot of thinking about the coming meeting of the G-7 finance ministers and central bankers in Washington. The meetings are likely to be dominated by discussions of what needs to be done to stimulate world growth as the U.S. economy is slowing.

America's economic problems are new. Japan's are more than a decade old. By now, the G-7 must be fed up with Japan's excuses for not fixing its economy. Miyazawa has to expect unwelcome public comments from the G-7 leaders that Japan isn't pushing fast enough on reforms.

By saying he is against ``artificial'' manipulation of the yen, Miyazawa is signaling that he has his eye on the more important issues of structural reform of the nation's banking system. Whether he will be believed is another matter.

Not that the G-7 itself hasn't endorsed periodic intervention into the currency markets over the years. But the difference between what the G-7 does and what Japan has done in previous times with foreign exchange is worth pondering.

Historically, the G-7 rationalizes intervention by asserting exchange rates are out of whack with economic fundamentals. For instance, in the early 1990s a number of coordinated interventions were conducted to buy dollars against the yen and the German mark on the grounds that the dollar was excessively weak relative to fundamentals -- trade balances, monetary conditions and political risk, among other things.

By contrast, Japan has a reputation for manipulating exchange rates, especially the dollar-yen rate, to help its export industries. It is not that Japan thinks the value of the yen is wrong, per se, but rather it just doesn't like where the currency happens to be trading.

Pity Japan, Not Hashimoto

It's also interesting to note that MOF appears to be getting cozy with Ryutaro Hashimoto, the former prime minister who is likely to return to fill out departing Prime Minister Yoshiro Mori's remaining term of office. Hashimoto is slated to win the presidency of the Liberal Democratic Party on Tuesday and be appointed prime minister two days later.

Miyazawa is hinting that the next prime minister, whoever that might be, will not ask him to stay in his post as finance minister. Nonetheless, Miyazawa had some nice words for Hashimoto.

Hashimoto was the unfortunate prime minister who raised the national sales tax from 3 percent to 5 percent in April 1997, an inopportune time. In another interview last week, Miyazawa went out of his way to say he was ``very sorry'' that Hashimoto had taken so much of the blame for driving Japan's economy over a cliff.

Feel sorry for Hashimoto? How about feeling sorry for Japan?