Foreign Exchange Dollar Falls Vs. Yen Essay, Research Paper
Foreign Exchange
Dollar Falls V. Hankering, Stays Flat vs. Others
As Traders Await Fed Move, Japan Data
By Jennifer M. Barrett
03/21/2000
The Wall Street Journal
( Copyright ( degree Celsius ) 2000, Dow Jones & A ; Company, Inc. )
NEW YORK & # 8212 ; The dollar retreated against the hankering but hardly budged against major
European currencies in thin trading in front of the Federal Reserve & # 8217 ; s Open Market Committee
meeting today.
With Tokyo closed for the Vernal Equinox vacation and bargainers expecting today & # 8217 ; s Fed meeting
and the release of new Nipponese trade informations tardily yesterday, traders said dollar-yen trading
was peculiarly light.
A bustle of dollar-buying helped the U.S. currency make a brief interruption out of its 106-yen
scope as trading kicked off in New York. But the dollar had hardly exceeded the 107-yen
grade when it was beaten back by strong chart opposition. After fighting to remain above
the intraday low of 106.28 hankerings halfway through the New York session, the dollar was at
106.45 hankerings late yesterday, down from 106.66 hankerings at the start of the session and 106.79
hankering late Friday.
Japan was slated to let go of its January business-activity index and February trade excess
merely earlier midnight. Analysts expect an addition in both.
The euro had nudged up to 97.29 cents from 97.20 cents late Friday.
The lb was merchandising at $ 1.5690, down from $ 1.5735 late Friday in New York. Sterling has
slipped about 3 % against the dollar since the start of the twelvemonth. The release today of the
2000-2001 United Kingdom budget is non expected to hold much consequence on the currency.
While a jutting interest-rate hiking by the Fed should supply support in the longer term for
the dollar, it is improbable to hold a noticeable consequence on intraday topographic point trading unless it
exceeds 0.25 of a per centum point. Analysts said a alteration of that proportion has already
been priced into the market.
If any currency is likely to register much reaction to a U.S. rate addition it is the Canadian
dollar. The Canadian currency has tended to leap after recent Fed actions on outlooks
the Bank of Canada will follow with similar additions.
The Canadian dollar could utilize the encouragement. It ended last hebdomad at its lowest degrees of the twelvemonth.
It was merchandising somewhat higher yesterday, with the U.S. dollar purchasing 1.4696 Canadian dollars
compared with 1.4710 late Friday.
After dropping about 1 % against the U.S. currency this month, analysts say the Canadian
dollar may eventually turn the corner this hebdomad. Canada & # 8217 ; s January trade excess, due out today,
is expected to hold expanded by at least C $ 200 million from the month earlier, to C $ 2.9
billion from C $ 2.7 billion for December.
Though Canada & # 8217 ; s consumer-price index, released last hebdomad, revealed a little addition & # 8212 ; to
a 1.6 % annual gait from 1.4 % in January & # 8212 ; that figure still is at the underside of the Bank of
Canada & # 8217 ; s 1 % to 3 % mark scope.
However, while many analysts say a rate addition is non needed, they believe the BOC
will O.K. one if the Fed moves today, in order to forestall a widening spread between U.S.
and Canadian outputs.
There is continued guess that the European Central Bank might besides raise rates once more
following hebdomad, peculiarly after new euro-zone consumer-price-index informations released late last
hebdomad showed rising prices in the part for February reached 2 % year-over-year growth-the
ECB & # 8217 ; s ceiling for monetary value stableness.
Still, talk has subsided slightly after remarks by ECB president Wim Duisenberg. Mr.
Duisenberg said that after the ECB & # 8217 ; s 0.25 percentage-point rise Thursday, euro-zone
involvement rates are & # 8220 ; appropriate for the present state of affairs & # 8221 ; despite continued monetary value force per unit area.
He emphasized that the ECB & # 8217 ; s enemy is rising prices instead than a weak currency, and that the
exchange rate is non a direct mark of
the ECB’s actions
Foreign Exchange
Dollar Rises Against Yen as Japan & # 8217 ; s
Central Bank Acts to Weaken Currency
By Jennifer Barrett
03/09/2000
The Wall Street Journal
Page C21
( Copyright ( degree Celsius ) 2000, Dow Jones & A ; Company, Inc. )
NEW YORK & # 8212 ; The dollar jumped more than one hankering after the Bank of Japan intervened to
weaken the Nipponese currency early in the Asiatic trading twenty-four hours.
Traders estimated Japan & # 8217 ; s cardinal bank bought between $ 1 billion and $ 3 billion in two
intercessions overnight. The actions pushed the dollar every bit high as 107.50 hankerings early in the
trading twenty-four hours.
Nipponese corporate repatriation in front of the financial twelvemonth terminal may partially explicate the hankering & # 8217 ; s
current popularity, but it isn & # 8217 ; t probably the driving force. Traders said the currency besides has
attracted sustained involvement from speculators, portfolio directors every bit good as corporate
purchasers.
With the Nikkei 225-stock index trading at around 20000, and Nipponese functionaries foretelling
economic enlargement, Asia is looking progressively attractive to foreign investors, they said.
The Bank of Japan intercession was seen more as a purchasing chance than the start of a
weakening tendency for the hankering, with the market dumping euros in droves to purchase hankerings after the
bank & # 8217 ; s action. The euro plunged to a record merely below 101 hankerings before it rebounded in New
York.
& # 8220 ; Euro/yen is the resort area of speculators and does non stand for economic
basicss, & # 8221 ; said Jeremy Fand, main foreign-exchange strategian at Fleet Global Markets
in Boston.
However, the euro/yen sell-off shows few marks of decelerating.
John Cholakis, a trader at Dai-Ichi Kangyo Bank in New York, said the euro could drop to
100 hankerings by hebdomad & # 8217 ; s terminal, as the European currency comes under continued force per unit area from
the dollar and lb in add-on to the hankering.
Late in New York, the dollar was merchandising at 107.20 hankerings, up from 106.17 hankerings late Tuesday.
The euro was at 96.08 cents, up from 95.95 cents late Tuesday.
Rumors of European Central Bank intercession around the 95-cent degree may hold sparked
some involvement in the European currency, but the market still seems divided on the
currency & # 8217 ; s way. & # 8220 ; This is a polar point, & # 8221 ; said a currency options trader. & # 8220 ; Some say we
could travel to 90 cents, others say we can travel to para. The market is still really nervous. & # 8221 ;
Widening derived functions are likely to ache the euro farther. Analysts expect another U.S.
interest-rate addition by month & # 8217 ; s terminal, peculiarly after the Federal Reserve & # 8217 ; s latest ecru
book reported & # 8220 ; appreciable enlargement & # 8221 ; in the U.S. economic system from January through
February.
Early on last hebdomad, Europe & # 8217 ; s common currency plunged to a record of 93.90 cents after it
became evident that the European Central Bank wouldn & # 8217 ; t raise involvement rates at its
midweek meeting. Although the euro was merchandising yesterday two cents above its all-time
depressions, analysts aren & # 8217 ; t governing out the possibility of a return to those earlier degrees & # 8212 ; particularly
if the Fed raises rates as expected in late March.
The Australian dollar rose to 60.92 cents tardily in New York from 60.50 cents late Tuesday.
The Australian Reserve Bank said yesterday that it had opted to go forth involvement rates
unchanged.
The South African rand retraced earlier losingss against the dollar. It ended the New York
session at 6.4685 rand to the dollar, compared with 6.5315 rand late Tuesday. Steven
Leach, main economic expert for Citibank & # 8217 ; s foreign-exchange desk in New York, wasn & # 8217 ; Ts surprised
by the rand & # 8217 ; s reversal. He said the South African currency, which is still down more than
5 % against the dollar for the twelvemonth, has been undervalued at recent degrees.
The dollar besides slipped further against the Mexican peso, as the Mexican stock market
surged more than 3.6 % . Late yesterday, the dollar was purchasing 9.269 pesos, compared with
9.28 pesos late Tuesday.