Asian News

[Ichiro]

From Money:--2 Feb 06


Bush Pushes Fed to the Right

While newly minted U.S. Supreme Court Justice Samuel Alito has earned the bulk of media coverage, new Federal Reserve Chairman Ben Bernanke is now ensconced at the Fed, operating under the radar so far.

But it's the Fed, and not just the Supreme Court, that is tilting more to the political right these days, argues Larry Kudlow, writing in National Review Online.

"President Bush has famously changed the composition of the Supreme Court with the appointments of judges John Roberts and Samuel Alito, two big conservative victories," writes Kudlow.

"But equally interesting is the president's overhaul of the Federal Reserve, which becomes the 'Bernanke Fed' with the retirement of Alan Greenspan this week. While the Supreme Court has loudly gone right, our central bank is quietly doing the same."

Kudlow points to a pair of new central bank appointments made by President Bush last week. Kevin Warsh and Randall Kroszner were tapped to fill two vacancies on the Fed's Board of Governors.

"Warsh is a current White House economic adviser and a former Morgan Stanley investment banker,"


says Kudlow. "Kroszner is the University of Chicago economics professor who served on the Council of Economic Advisers during Bush's first term. The two nominees are tried and true free-market, low-tax, deregulation-inclined policy advisers."

Two previous Bush appointees to the Fed - Susan Bies, a former Tennessee banker, and Mark Olson, formerly with Ernst & Young and U.S. Bancorp and a legislative assistant to former Republican congressman Bill Frenzel of Minnesota - have pushed the Fed further to the right, adds Kudlow.

"All told, Bush has appointed six of the seven current board members - an incredible turnover. While they are not all supply-siders (Donald Kohn is more of a traditional Washington Keynesian, while Roger Ferguson is a Clinton-era carryover), I would say this Fed board is at the margin much more supply-side - in terms of an allegiance to low taxes and regulations - than prior boards."

Kudlow continues: "Adding together the shifts to the Supreme Court and the Federal Reserve, it could be argued that the policy organs that hold sway over the judicial and monetary influences on business are more free-market, Reaganesque and pro-growth than anything we've seen in a long time."

That should create a Federal Reserve that will be more open to free-enterprise growth and less biased toward higher taxes and stricter economic regulations.

"With a firm monetary foundation, Reagan-like policies of low tax rates and free-market deregulation will afford American entrepreneurs the freedom and rewards that are necessary to maximize economic growth," concludes Kudlow.

"Without question, the private sector must be liberated so it can effectively function as the engine of prosperity. This capitalist model was restored and rejuvenated by President Reagan 25 years ago and its success has been copied worldwide. Bush's appointments to the Fed and the Supreme Court are the latest testament to this."

 

[Ichiro]

Good news! The European Central bank (ECB) laid the groundwork for a rise in interest rates as early as next month. This is good because it will offset the increase by the anticipated rate increase by the FED in March. Without this increase by ECB, it will only increase the demand of the US dollars and lower our I fund return. I think that in another six months or so the Japanese monetary officials will be raising their interest rates to reduce inflation.


AP
Euro Down Slightly Against Dollar
Friday February 3, 7:31 am ET
Euro Down Slightly Against Dollar After European Interest Rate Decision

FRANKFURT, Germany (AP) -- The euro dropped slightly against the dollar on Friday with some analysts predicting a strong report on U.S. job creation.

In morning European trading, the 12-nation currency bought $1.2071, down from $1.2096 in New York trading the night before, when it rose after the European Central Bank laid the groundwork for a rise in interest rates as early as next month.

The ECB left its interest rate unchanged at 2.25 percent during its meeting Thursday, but President Jean-Claude Trichet said he would adjust rates as necessary to keep prices stable.

"In the shorter period of time we will continue to do whatever is needed in delivery of price stability," Trichet said. "But I won't say anything about what we will decide afterward."

Most analysts are convinced the bank will move to increase the rates in March. Higher interest rates usually bolster a currency by attracting international investors.

On Wednesday, the U.S. Federal Reserve raised interest rates to 4.5 percent in a widely expected move.

The British pound was down to $1.7769 Friday from $1.7796 the night before.

The dollar bought 118.49 Japanese yen, up slightly from 118.45, setting six-week highs in part on speculation that Friday's U.S. payrolls data for January will reinforce confidence in the strength of the U.S. economy.

 

[Ichiro]

Very interesting!!!!

Friday February 3, 5:46 PM
SE Asia Stocks-S'pore off 6-yr highs on rate worries
SINGAPORE, Feb 3 (Reuters) - Singapore shares snapped a six-session rally on Friday, as worries that short-term interest rates may rise higher than expected hit banks and property stocks.

Asian markets were spooked by U.S. data released on Thursday showing higher labour costs and lower business productivity; That could be an early sign of inflation pressure building in the world's largest economy.

The threat of higher inflation could prompt the U.S. Federal Reserve to keep raising interest rates, which would cut into corporate profits and hurt consumer spending.

Singapore's Straits Times Index ended 0.4 percent off Thursday's six-year closing high, led by losses in United Overseas Bank , down 0.7 percent, and CapitaLand Ltd. which fell by almost 2 percent.

Eddie Wong, chief Asian strategist at ABN AMRO, said a lot of capital in recent months has flowed into Asian markets from the U.S. bond market, where long-term bond yields have not matched the rise in short-term bond yields, offering little premium to investors.

He warned that inflationary expectations might reverse the trend and start lifting long-term Treasury yields.


"That could potentially reverse the fund flow back to the bond market," Wong said.

Higher long-term yields also dampen foreign portfolio investors' appetite for high-risk emerging market assets.

Singapore Airlines fell 2.9 percent, a day after the world's second-most valuable airline posted its fourth straight quarter of declining earnings and said the high price of jet fuel was its biggest worry.

Elsewhere in the region, the Philippine index closed 0.96 percent lower while Indonesian stocks ended just 0.06 percent higher aided by mobile phone operator Bakrie Telecom's strong trading debut.

The medium-sized company, a relatively new entrant to the rapidly growing mobile telecoms sector in the region's largest economy, opened 45 percent above its initial offer price.

Malaysian shares resumed trade after a break of almost a week, rising 1.51 percent -- the biggest single-day rise in about seven months -- to hit a 3-½ month high, aided by a 9.5 percent rise in plantation firm IOI Corp. .

IOI had announced a 30 sen interim dividend on January 27, the last day of trade before the holidays.

"We are overweight on the plantation sector for its defensive earnings, strong growth prospects due to rising CPO (crude palm oil) price and good dividend yields," said CIMB analyst Ivy Ng in Kuala Lumpur.

By 0908 GMT, Thai stocks had risen 0.83 percent, recovering from a two-week closing low, led by a 4.7 percent rise in Thai Petrochemical Industry .

However, the market's upside was capped by worries ahead of an anti-government rally planned for the weekend, dealers said.

Thai Prime Minister Thaksin Shinawatra has faced several such rallies in recent months; his family's decision to sell its stake in Shin Corp for $1.9 billion last month attracted criticism and has been investigated by Thai regulators.

The stock regulators said Thaksin's son probably broke stock disclosure laws by failing to report shares in the telecoms empire his father founded and which his son held offshore.

 

[Ichiro]

From Moneynews---4 Feb 06. (invest in overseas stock index using ETFs (EFA and VPL).



Exchange Traded Funds

Got an ETF in your investment portfolio yet?

Chances are, you might. According to a September estimate by Boston-based Financial Research Corp., total assets committed to exchange-traded funds could rise 29% to $1 trillion by 2010.

In 1993 the first ETF (known as the Spider) was launched to track the S&P 500 index. Today there are 201 funds, with 50 new ones added in 2005.

The flow of investments into ETFs totaled $53.9 billion last year, causing the total value to surge to $296 billion, according to the Investment Company Institute.

ETFs seem to be a more popular tool among institutions.

Because of the liquidity of the ETF market, when a portfolio manager takes in fresh money, with a single stroke they can put the cash to work with a sector or index ETF. That keeps the money fully invested until the manager decides which individual shares he wants to commit the money to.

Since ETFs are passive rather than actively managed, the lower fees tend to get passed on to clients.

For example, on a $10,000 investment, an ETF investor can expect to pay $36 annually in fees, compared to $147 for actively managed funds.

Similarly, internationally devised ETFs command just $55 in fees per year as opposed to the $174 fee on actively managed funds.

Investors by and large have warmed to the ETF revolution with one key feature being that the divide between professional and small investors has narrowed.

The ability to invest in a single share of an index, sector or single commodity (such as gold) has made for smarter investing by the army of small investors.

Investors have poured $6.1 billion into the StreetTracks Gold Trust since it began trading in November 2004. It makes me wonder whether that money would otherwise have been put into individual gold-mining stocks, which are clearly riskier.

 

[Ichiro]

Info on foreign exchange rate. The USdollar is strengthening due to possible increase in federal interest rate in March 06.

Dollar Gains for Week as Jobs, ISM Boost March Rate Prospects

Feb. 4 (Bloomberg) -- The dollar rose for a fourth straight week against the euro and a third versus the yen as reports showing U.S. economic growth bolstered expectations the Federal Reserve will lift interest rates again in March.

The currency climbed to the highest since Jan. 3 versus the euro and erased losses from last month against the yen as the Fed lifted its benchmark rate a 14th straight time to 4.5 percent. Traders increased bets the central bank will raise borrowing costs again after reports showed manufacturing expanded and the unemployment rate fell to the lowest since July 2001.

``Dollar bullishness is relatively strong,'' said Kathy Lien, a currency strategist in New York at Forex Capital Markets LLC. ``Right now the market is thinking the March decision is pretty much intact.''

For the week, the dollar strengthened 0.6 percent to $1.2024 per euro at 5 p.m. yesterday in New York. The currency has pared about half its 2.5 percent decline from the first week of the year. It reached $1.1969 yesterday, the highest in a month.

Versus the yen, the U.S. currency climbed 1.4 percent to 118.94, touching 119.40 yesterday, the highest since Dec. 14. It is up 1 percent against the Japanese currency for the year after falling 2.8 percent the first week of January.

``The dollar still hasn't finished its move upward,'' James McCormick, head of global currency in London at Lehman Brothers Holdings Inc., wrote in a note to clients Feb. 2. Lehman advised clients bet the dollar will gain further versus the euro because a ``mildly hawkish'' Fed will raise rates further, he wrote.

`Solid' Growth

U.S. policy makers raised the overnight lending rate between banks to 4.5 percent on Jan. 31. The Fed said it will ``respond to changes in economic prospects'' when making future decisions. It said the U.S. expansion ``appears solid.''

The Labor Department said U.S. employers added 193,000 jobs last month from a revised 140,000 in December. The jobless rate slid to 4.7 percent from 4.9 percent. Economists expected 250,000 new jobs in January and an unemployment rate of 4.9 percent, based on a Bloomberg News survey.

The Institute for Supply Management's factory index was 54.8 in January, from a revised 55.6 in December, a report showed on Feb. 1. Readings above 50 indicate expansion.

``The longer-term trend for the dollar is higher for the balance of the year,'' said Jeff Gladstein, global head of foreign-exchange trading at AIG Financial Products Corp. in Wilton, Connecticut. ``The economy is doing fine.''

`Sell Some Yen'

The dollar gained more than 14 percent versus the euro and yen last year as the European Central Bank raised rates only once and the Bank of Japan kept rates near zero percent, where they have been since 2001. BOJ Deputy Governor Toshiro Muto said on Feb. 2 it's too early to reverse the bank's zero-rate policy.

The dollar's recovery versus the yen has been stronger as investors have been adding to bets that the Japanese currency will fall versus higher-yielding currencies. Traders will often borrow in lower-yielding currencies such as the yen and invest the funds in currencies where returns are higher, a strategy known as a carry trade.

``No matter how good the situation in Japan gets, they're not going to raise interest rates soon,'' said Brian Rose, a currency strategist in New York at Bank of Tokyo-Mitsubishi UFJ. ``As long as rates are zero, you might as well sell some yen.''

The yield on federal fund futures for April delivery rose 2 basis points, or 0.02 percentage point this week, to 4.72 percent at the Chicago Board of Trade. The level signals traders see about a 90 percent chance of an increase to 4.75 percent rate at the Fed's March 28 meeting, up from 80 percent on Jan. 27.

Rate Gap

The gap between two-year U.S. Treasuries and Japanese debt widened to 4.28 percentage points this week, the most since May 2001. The yield premium offered by two-year notes over German debt is about 1.64 percentage points. The difference, or spread, has averaged 0.84 percentage points in the past decade.

The dollar's gain this week was predicted by Bloomberg's weekly currency survey published Jan. 30. Sixty-four percent of the 50 traders, strategists and investors surveyed Jan. 27 from Sydney to New York advised buying the dollar against the yen.

The U.S. currency posted its biggest weekly in decline in three years during the first week of January, after the Fed released minutes from its December meeting that said additional rate increases ``probably would not be large.''

ECB President Jean-Claude Trichet said on Feb. 2 that market wagers on an increase next month were ``reasonable.'' He spoke after policy makers kept the refinancing rate at 2.25 percent.

Some investors who are forecasting the dollar will resume a decline said the recent rally provided an opportunity to purchase the euro at lower levels.

``The dollar will weaken,'' said Adnan Akant, head of foreign exchange in New York at money manager Fischer Francis Trees & Watts, with $37 billion in assets. ``We bought some euros below $1.20. We took advantage of the dip in the euro.''

 

[Birchtree]

Great stuff

Ichiro,

Thanks a lot for your posts - you really save me some time by providing this information. And with your comprehensive format I'm better informed. Just wanted to let you know your efforts are appreciated. Thanx again.

Dennis

 

[Ichiro]

Its M&A again! Once the US dollar dips lower as compared to the Yen and the euros in the near future, the European and the Japanese companies will be buying US companies at a discount.


Toshiba to buy 100% of Westinghouse for $5.4 bln

Last Update: 6:08 AM ET Feb. 6, 2006


LONDON (MarketWatch) -- Japan's Toshiba Corp. (6502.TO) President and Chief Executive Atsutoshi Nishida said Monday the company will buy 100% of Westinghouse for $5.4 billion and retain a 51% stake in the company.

MARKETWATCH TOP NEWS
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Banking bid hopes lead Europe higher.
Asia markets end higher despite early losses.
Is something wrong with General Electric?


"We have completed our due diligence and are satisfied that this purchase is the right move for our business and our shareholders," Nishida said. "With Westinghouse, Toshiba will be a global nuclear power business organization."

Mike Parker, chief executive of British Nuclear Fuels Ltd. (BNF.YY), which owned Westinghouse, said the deal "will provide Westinghouse with (the ability) to compete more effectively for new U.S. customers."

Upon completion of the acquisition, Toshiba expects its nuclear power business to expand to three times the current level by 2015 as a result of operational and technological synergies, Toshiba said in a statement.

The company said it decided to acquire Westinghouse "in order to take an early lead in the promising global nuclear power plant industry."

 

[Ichiro]

MOneynews---6 Feb 06

1. Dallas Fed Chief: Expect Solid Q4 Growth

The mainstream media seems intent on trumpeting economic news that makes President Bush look politically vulnerable.

Consider recent coverage of U.S. economic growth for the fourth quarter.

At 1.1%, it was nothing to write home about. But papers like The New York Times and Washington Post, and all three major broadcast networks played up the sluggish Q4 economic performance.

This was after months of minimal coverage of the economy's booming economic growth and the continued downward slide in the U.S. unemployment rate. Reuters' jobs number headline called job growth "disappointing" despite the addition of 193,000 jobs and a reduction in the unemployment rate to 4.7%.

Now the Federal Reserve is already saying that the Q4 numbers will likely be revised upward.

"I would not be surprised if GDP were revised upward when we take a more definitive look at the fourth quarter," Dallas Federal Reserve President Richard Fisher said in a speech to the London-based Institute of Economic Affairs on Monday.

Fisher also had a decidedly bullish tone on the future prospects of the American economy. He told the London audience that the economy would grow at a solid pace, especially if the Fed could tame inflation and trade faced few barriers.

"As long as the Federal Reserve does its job of holding inflation at bay, and as long as our political leaders resist protectionism and other forms of interference with creative destruction, we will remain a productive economic machine," he said.

Fisher was also less worried about the U.S. housing market, which some economists say is in peril after a drop in consumer spending during the past few months. A slow-growth home-sales market would further crimp consumer spending, economists say.

But Fisher told the audience that the high number of American homeowners who have fixed-rate mortgages would cushion any damage inflicted upon the housing market by rising interest rates. He also said that riskier variable-rate mortgages were only a "small fraction" of the U.S. consumer home loan market.

"It is not unreasonable to think the (housing) situation is manageable, albeit worth watching closely," he said.

 

[Birchtree]

Radio Free Iran is more American than NPR - IMHO

Ichiro,

Unfortunately, you have stumbled onto an emotional hot button. The media in this country is overwhelming to the left. They would rather perpetrate the views of multiculturalism and communism instead of the values that made this country great. I never listen to National Public Radio unless I have bread in the area to use as a strainer. I get nauseous when I hear the name Howard Dean mentioned. OK I'll stop while I still have my skin.

Dennis

 

[Dave M]

"Nauseous"?

Surely you meant nauseated. D

 

[Birchtree]

Affected with nausea

DaveM,

Nope - ment just like it was written - there are also a few others that affect me the same way. Let's have a good day tomorrow - I actually do better in my accounts on a low Dow industrial gain. Take care.

Dennis

 

[Ichiro]

Tuesday February 7, 1:46 PM, Reuters by Ovais Subhani
SE Asia Stocks-S'pore hits 6-yr high, other mkts mixed


SINGAPORE, Feb 7 (Reuters) - Singapore's benchmark index edged up on Tuesday, hitting an intraday six-year high, as recently battered banks and transport stocks recovered, taking cue from a retreat in oil prices to below $65 a barrel.

The Straits Times Index had edged up 0.31 percent by the midday break, above a six-year closing high hit last week.

Top lender DBS Group gained 0.6 percent and United Overseas Bank was 0.7 percent higher, after taking a beating on Monday when oil prices rose to above $66 a barrel.

Singapore Airlines (SIA) rose as much as 0.8 percent, a day after falling 1.5 percent. The airline last week posted its fourth straight quarter of declining earnings and had said that the high price of jet fuel was its biggest worry.

"Fuel expense is likely to increase as current spot price is higher than the average in the last quarter," said Kim Eng head of research Seah Hiang Hong.

Still, Seah said investors should look at SIA as the city-state's "prime restructuring play", given the potential sale of its stakes in Singapore Airport Terminal Services and SIA Engineering . The move could result in return of surplus cash to investors or payment of a special dividend.

Hotel and resorts firm BIL International rose 6.1 percent to become the top percentage gainer after the company announced that British authorities had approved its subsidiary, BIL Gaming Operations UK Ltd., to be a licensed casino operator.

BIL, which announced its move into Britain's casino scene in August last year, said it will proceed to formally apply for licences for 16 casino locations in Britain.

Elsewhere, Indonesian stocks rose 0.77 percent on gains in energy firms such as natural gas distributor P Gas Negara , up 7.1 percent, and oil and gas exploration firm Energi Mega Persada which rose 4.8 percent.

Dealers in Jakarta said speculation over a possible rise in natural gas prices has pushed the stocks higher.

Malaysian stocks fell 0.81 percent, a day after closing at their highest in about six months, and the Philippine index ended down 1.68 percent.

By 0518 GMT, Thai stocks were flat, just 0.10 percent lower, amid lingering political concerns and selling by foreign investors, dealers in Bangkok said.

Over the weekend, a second minister resigned from Prime Minister Thaksin Shinawatra's cabinet and a big anti-government rally was held.

Thaksin has faced several such rallies in recent months; his family's decision to sell its stake in Shin Corp for $1.9 billion last month attracted criticism and has been investigated by Thai regulators.

 

[Ichiro]

Marketwatch, 6 Feb 06--By Myra P. Seafong

Oil taps $66 then falls; market weighs Iran
Natural-gas supplies deemed ample, futures sink 7%


SAN FRANCISCO (MarketWatch) -- Crude-oil futures climbed over $66 a barrel Monday, then ended lower for the session as traders weighed the possibility of sanctions against Iran, the world's fourth-largest oil exporter.

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The International Atomic Energy Agency over the weekend voted to refer Iran to the Security Council, opening the way for international punishment against the country, on an "absence of confidence" that Iran is using its nuclear program for strictly peaceful means. See story.

"Things got really heated up over this Iran thing, and traders hate leaving such big profits on the table for news that could change at any moment," said commodities trader Kevin Kerr.

Against this backdrop, crude oil for March delivery climbed as high as $66.25 a barrel on the New York Mercantile Exchange. But it closed 26 cents lower at $65.11 a barrel.

"Iran's oil minister has said that oil exports would not be used as a bargaining chip, but that possibility must be considered, particularly if tensions escalate," said Michael Fitzpatrick, an analyst at Fimat USA.

He called the potential for supply disruptions "very real," growing out of either Iran restricting oil to western consuming nations or by the U.N. placing "sanctions or an outright embargo" on Iranian oil.

Along with ranking fourth overall, Iran's the second-largest exporter belonging to the Organization of the Petroleum Exporting Countries, following only Saudi Arabia, according to Phil Flynn, a senior analyst at Alaron Trading. The country is also home to more than 132 billion barrels of proven crude reserves and produces 3.8 million barrels per day, according to OPEC data.

At the IAEA conference, German Chancellor Angela Merkel used particularly tough language, likening Iran's nuclear threat to the early days of the Nazi regime.

'Saber rattling'

The concerns over Iran lifted oil above $66 for a spell Monday, and prices for other commodities, as markets prepared for increasing tensions.

"A serious war is becoming increasingly likely, and war has historically always resulted in soaring inflation and soaring commodity prices, with base metals in strong demand," said Martin Hennecke, a financial adviser with Hong Kong brokerage Bridgewater.

For now, "European leaders are pressing Iran to step back their 'saber rattling' threats over nuclear developments," said John Person, president of National Futures Advisory Service.

"This situation was priced in the market last week -- and as traders returned back to work and focused on the current fundamental supply situation -- prices backed down off the highs," he said.

"Granted, prices have backed off the highs, but we are still well above $60 per barrel," he said, noting that this "could be the mid point or low end of a steady trend in prices this spring."

Supply watch

Adding to crude's retreat Monday, markets looked to recent supply data seen as bearish for oil prices.

"Inventories are well above normal levels regardless of the weather or other disruptions," said Serge Laureau, a trader with Saxo Bank.

Indeed, "absent the geopolitical uncertainty, prices should be moving lower, with all three elements of the complex [crude, gasoline and distillate supplies] showing a surplus against last year at this time," said Fitzpatrick.

March gasoline futures closed down 3.75 cents at $1.6442 a gallon and March heating oil lost 1.88 cents to finish at $1.7628 a gallon.

Indeed, expectations for strong U.S. supply numbers this Wednesday contributed to the late-session price retreat, said commodities trader Kerr, who also edits Global Resources Trader, a newsletter service of MarketWatch, the publisher of this report.

Analysts at Wachovia Corp. expect the Energy Department to report a climb of 1.5 million barrels in crude supplies for the week ended Feb. 3. IFR Markets expect supplies to be unchanged or up as much as 2 million barrels.

Motor gasoline supplies likely rose 2.5 million, Wachovia said. IFR sees a rise between 1 million and 2 million barrels for the fuel

And Wachovia predicts a 450,000-barrel increase in distillates. In contrast, IFR sees a fall of 1 million to 2 million barrels.

Natural gas drops to June levels

However, natural-gas futures closed at their lowest levels in eight months as the majority view in the market deemed supply as ample to meet seasonal demand.

"No one expects a sustained bout of cold that could seriously weigh on storage," said Fimat's Fitzpatrick, adding that "domestic gas stocks are at record high levels for this time of year."

Natural-gas futures for March delivery fell as low as $7.90 per million British thermal units, a level not seen since June 1. It closed down 61.8 cents, or 7.2%, at $7.995.


Meanwhile, gold futures closed higher, finding support from the tension over Iran, but at least one analyst warned traders to watch out for a significant correction. See Metals Stocks.

Taking a broad measure of the commodity-futures markets, the Reuters/Jefferies CRB Index stood at 343.3 points, down 0.8%, on the New York Board of Trade.

Myra P. Saefong is a reporter for MarketWatch in San Francisco.

 

[Ichiro]

From Daily Mainichi Newspaper---6 Feb 06.

Japanese foreign exchange reserves rise to record US$851.7 billion in January

Japan's foreign exchange reserves rose US$4.80 billion in January to a record high US$851.67 billion, helped in large part by a stronger euro, the Finance Ministry said Tuesday.

The increase in the nation's reserves, which includes convertible foreign currencies, gold and International Monetary Fund special drawing rights, follows a US$3.63 billion rise in December and a US$1.48 billion increase in November.

The euro's recent rise against the dollar was the biggest factor in pumping up the reserves, the ministry said. It was also aided by geopolitical factors, including the stroke of Israeli Prime Minister Ariel Sharon and the uncertainty of the Palestinian peace process and the impasse with Iran over its nuclear program, the ministry said.

The euro was quoted at US$1.2156 in New York at the end of January, up from US$1.1848 at the end of the previous month.

Japan's foreign exchange reserves have shown only minor changes, mostly in line with exchange rate fluctuations, since Tokyo stopped its campaign of currency-market intervention in March 2004.

Japan was also the largest holder of reserves for the 74th straight month in November with US$831.08 billion, followed by China, according to the latest data available from the IMF. Data from the IMF differ slightly from those issued by the MOF due to differences in methods used to calculate the value of gold. (AP)

February 7, 2006

 

[roguewave]

Japan's Warlords Meddling In The Nikkei-225, Yen, And Jgb Markets

Ichiro, here's a different perspective about the Yen and Nikkei-225 apart from the paid-for BS that the mainsteam press puts out to steer unsuspecting "investors". You might catch that little tidbit about China becoming Japan's largest trade partner replacing us here at home. What do you think that might suggest regarding the future Yen/Yuan exchange rate vs. the Yen/Dollar exchange rate?


http://www.[[financialsense.com/fsu/editorials/dorsch/2006/0207.html

 

[Ichiro]

Roguewave,
I do not know much about the future Yen/Yuan exchange yen and maybe you could provide input in this area.

However, as far as the Yen/Dollar Exchange rate, I think that the BOJ will keep their easy monetary policy in the short term since Japan is not in an inflationary environment. But, the big jocker like in China is the price of oil since Japan must import 100% of their oil. In March 06, both the Federal Reserve and the European monetary bank may increase their interest rate but BOJ may not. The US dollar will appreciate against the Yen. So, what am I going to do with the ETFs in my ROTH IRA account (VPL and EFA)--buy when the dollar-yen exchange hits in excess of 120 and if the ETFs (VPL and EFA) are in upward trend. This is my short term move. As far as my long term in the international fund area, I have my $$$ invested in the Dodge and Cox International Funds. The Dodge and Cox International fund is an excellent fund (very conservative) and may eventually close in the near future.

 

[Ichiro]

Marketwatch---8 Feb 06.

Shanghai sole gainer as Asia recedes
By Chris Oliver, MarketWatch
Last Update: 5:57 AM ET Feb. 8, 2006

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TRACK THESE TOPICS

HONG KONG (MarketWatch) -- Asian markets ended broadly lower Wednesday, with traders cautious as Japanese earnings wound down and Wall Street disappointed.

The downdraft was felt across all major regional markets apart from the Shanghai Composite Index, which nudged 0.25% higher.

In Tokyo trading, the Nikkei 225 plunged in afternoon trading as much as 2.68%. The broader Topix index fell 2.46% to 1,671.39.

In its global strategy report, Morgan Stanley said it was cutting its outlook on Japan and emerging markets after recent equities gains. The investment bank said it was boosting its outlook on U.S. shares.

"Japan and emerging markets have surged 12% and 15% since the end of November, placing them above our year-end targets. At the same time, our U.S. equity team still looks for more than 10% upside balance for the rest of the year," the bank said in note to clients.

In Hong Kong, the Hang Seng Index fell 0.93%, while the China Enterprise Index plunged as much as 2.88%.

"I think it's a healthy correction, some valuations got a little high," said Henry Chan, head of research at Quamnet, a research portal and adviser based in Hong Kong.

Resource stocks slumped as institutional funds rotated away from commodity-related shares and towards mainland financials on fears a U.S. slowdown could weight on consumption, analysts said.


Chan says banking shares are looking up as China's bank lending cycle begins to reaccelerate. New-loan growth peaked in October 2003 at 24% annually, sparking a round of central government austerity measures that have since dampened new loan issuance to 9% a year.

"There is still a chance for loan growth to slow further, but the Chinese government is slowly loosening. If loan growth picks up, it will be good for banks," Chan said.

South Korea's Kospi Index fell as much as 1.6%, while Taiwan's Weighted Index fell 1.43%. In Singapore, the Straits Times Index was off 0.84%.

Sydney's All Ordinaries plunged as much as 1.51% on soft commodity prices. New Zealand's Gross 50 Index was off as much as 0.71%.

Japan's biggest car maker by sales volume posted a group net profit of 398 billion yen ($3.6 billion) in the quarter ended Dec. 31, up 34% from a year earlier. Merrill Lynch left its neutral rating on the share unchanged despite improving sales, citing the shares' hefty 61% rise from their low in the past year.

Advantest Corp (JP:6857: news, chart, profile) fell 3% on speculative selling after the world's largest maker of chip testing equipment marked a fresh five-year high on Monday.

Financial institutions also took a hit, as Japan's biggest lender Mitsubishi UFJ Financial Group Inc, (JP:8306: news, chart, profile) declined 3%.

 

[Ichiro]

From Mainichi Daily ---8 Feb 06:


Dollar flat against yen in Asian trading as traders await BOJ meeting

The dollar was almost flat against the yen Wednesday in Asia as traders adjusted their positions amid mixed sentiment over the Japanese central bank's monetary policy.

The dollar was trading at 118.02 yen by mid-afternoon in Tokyo, down 0.07 yen from late Tuesday. The euro rose to US$1.1975 from $1.1973 in New York.

Traders said U.S. hedge funds and Japanese securities firms bought dollars for yen, helping the U.S. unit climb back above 118.00 yen to hit an intraday high of 118.13 yen on EBS, after briefly dipping to a low of 117.54 yen.

But the U.S. currency failed to extend much gains as traders were cautious of selling yen too actively on lingering speculation that Bank of Japan Governor Toshihiko Fukui may express more hawkish views about ending Japan's ultra-easy monetary policy when he meets the press on Thursday, traders said.

Some other Tokyo players, however, were taking a different view, which was partly behind the yen's rises against major currencies overnight in New York, other players say.

"The most important thing is

when Japanese interest rates actually start to rise, and that's still a long way off," said Takehiko Jimbo, chief foreign exchange manager at Mitsubishi UFJ Trust Bank.

Fukui will meet reporters after the end of the BOJ's two-day policy meeting, where board members are widely expected to keep the central bank's ultra-easy monetary settings intact.

Senior BOJ officials, including Fukui, have suggested that the BOJ may end quantitative easing, in which it floods the money market with excess liquidity, as early as this spring. But many analysts expect the BOJ to keep short-term interest rates near zero for some time even after changing the current policy framework.

Higher interest rates tend to make a country's currency more attractive to investors.

The euro was also largely unchanged against the dollar, lacking a clear sense of direction due to a dearth of major U.S. economic indicators this week for gauging the course of U.S. monetary policy, traders said.

The dollar was higher against other Asian currencies, rising to 3.7350 Malaysian ringt from 3.7335 the previous day, and to 32.220 Taiwan dollars from 32.120. It also rose to 51.790 Philippine peso from 51.560. (AP)

February 8, 2006

 

[roguewave]

Ichiro, I will get back to you, hopefully later on this evening FiveTears, if you don'thave the stomach for it, shift back to the G Fund 100%. I've come across some info. that the European, Asian and American equity markets are going to be taken down a notch or two over the next four to six weeks and that the dollar will remain range bound with a little upward movement over the same time frame. I am actually considering shifting for the second time in over two years. I'll keep researching. Good luck.

 

[Ichiro]

Yuan May Rise Less Than Forecast, Provoking China, U.S. Tension

Feb. 9 (Bloomberg) -- China's government, placing job growth ahead of trade relations with the U.S., Europe and Japan, will limit the yuan's rise this year.

Since July 21, when China took the first step in a decade toward allowing a freely traded currency by allowing it to gain 2.1 percent against the dollar, the yuan has barely risen. Chinese government reports since then showed China's trade surplus expanded to a record $102 billion last year, and triggered threats of tariffs from U.S. Senators Charles Schumer, a New York Democrat, and Lindsey Graham, a Florida Republican.

``Demands for a dramatic appreciation are a non-starter,'' Qing Wang, a senior currency strategist at Bank of America Corp. in Hong Kong, said on Feb. 1. Chinese officials are concerned that a stronger currency may cause companies ``to go bankrupt and people to lose their jobs,'' he said.

The yuan will rise 3 percent to 7.8 per dollar by year-end, according to the median estimate of 27 traders and analysts surveyed by Bloomberg News between Dec. 28 and Feb. 1. A similar reading last August predicted the yuan would strengthen 4.3 percent.

China grew 9.9 percent last year, the fastest among the world's major economies, passing France and the U.K. to become the fourth largest. Exports surged 28 percent, accounting for about 40 percent of the $2.3 trillion economy, the government said on Jan. 25 in Beijing.

`Sizzling' Economy

U.S. Treasury Secretary John Snow, IMF Managing Director Rodrigo de Rato and Japanese Finance Minister Sadakazu Tanigaki all said last month that the yuan is undervalued, giving China's exporters an unfair advantage. European Union industry commissioner Guenter Verheugen said on Dec. 12 he didn't ``exclude the possibility'' of referring China to the World Trade Organization this year.

``That economy is sizzling and we take that into consideration in our negotiations,'' Tim Adams, the U.S. Treasury's top official for international issues, said in a Jan. 25 interview at the World Economic Forum in Davos. ``It does make it more complicated for them to say whatever we've asked them to do is detrimental to growth.''

People's Bank of China Assistant Governor Ma Delun said the difference between wages in China and its partners, not currency policy, is responsible for the trade gap. ``Workers' pay in China is 1/33rd of that of a U.S. worker,'' Ma said in an interview in Shanghai on Jan. 18. He said the market decides the currency's value.

Official Numbers

China reports the unemployment rate for its cities, not for rural areas where people live on about $300 per year and earn about a third of those in urban areas, according to a United Nations Development Program report released on Dec. 16. China's urban unemployment rate was 4.2 percent last year, the government said on Jan. 25.

``The official unemployment rate is on the low side,'' Shen Minggao, an economist in Beijing for Citigroup Inc., the largest U.S. financial services company, said in an interview on Feb. 6. China's urban jobless rate may be as high as 11 percent, he said.

The yuan has risen 0.7 percent since the revaluation, which pegged the currency to a basket that includes the dollar, euro, and yen. At the time, the government said the currency could move as much as 0.3 percent per day. The biggest swing has been less than 0.1 percent against the dollar. The yuan is a denomination of China's currency the renminbi.

Small Swings

China ``should have a dramatically more flexible currency,'' Kenneth Rogoff, professor of economics at Harvard University and former chief economist for the International Monetary Fund, said in an interview on Jan. 10. ``They're better to introduce a bit of flexibility now before it's forced on them.''

Rogoff expects the yuan to strengthen between 3 percent and 5 percent this year.

The People's Bank of China is taking steps to encourage more trading of its currency. The central bank on Jan. 4 named 13 institutions including Citigroup and HSBC Holdings Plc, Europe's biggest bank by market value, as market makers, firms that stand ready to buy and sell the currency.

Six lenders including Mitsubishi UFJ Financial Group Inc., the world's biggest bank by assets, were told on Sept. 19 they could offer forward contracts, which allow investors to speculate on the future value of the yuan to hedge their investments.

The Hong Kong forwards market, where contracts are settled in dollars instead of yuan, indicates traders expect the currency to reach 7.7 to the dollar in a year. In August 2005, the contracts indicated a rise to 7.875 in 12 months.

`China Is Ready'

``China is ready,'' said Jonathan Anderson, chief Asia economist in Hong Kong for UBS AG, the world's second-biggest currency trader. ``They've given us the market-maker system. They've introduced the forwards market. That's really all you need.''

Snow has avoided putting public pressure on Chinese officials. ``The situation come March will look different than we see today,'' he said in a Dec. 1 interview.

The July revaluation kept the U.S. Treasury from naming China a currency manipulator in its quarterly review of trading partners' exchange-rate policies released on Nov. 28. The next report is due April 15.

``It will be gradual,'' Donald Straszheim, president of Straszheim Global Advisors, said in an interview on Jan. 17 from Los Angeles. ``China's financial markets and their banking system are extraordinarily fragile. They cannot endure the rough and tumble of the global financial markets.''

Some economists say the trade surplus and accelerating economy mean there's little reason to be patient.

``This will increase the political pressure from outside for China to allow the currency to appreciate,'' Frank Gong, chief economist for Greater China at JPMorgan & Chase Co., said in Hong Kong. ``Domestic demand is much stronger than expected. They can afford to rely less on exports.'' Gong said he expects the yuan to strengthen 12 percent this year.

Q4 2005 USD/CNY
Deutsche Bank AG 7.7
UBS AG 7.85
JPMorgan Chase & Co. 7.00
Standard Chartered Plc 7.9
Merrill Lynch 7.48
HSBC Holdings Plc 7.85
Citigroup Inc. 7.8
Credit Suisse 2 to 3 percent appreciation
Deutsche Asset Management 7.68 or 7.69
Sumitomo Mitsui Banking Corp. 8.04
Bank of America 7.63
Goldman Sachs Group Inc. 7.8
United Overseas Bank 7.78
Brown Brothers Harriman 7.86
Morgan Stanley 7.8
ANZ Investment Bank 7.78
BNP Paribas 7.6
Dresdner Kleinwort Wasserstein 7.7
Rabobank 7.81
Royal Bank of Scotland 7.6
ABN Amro Bank 7.65
Skandinaviska Enskilda Banken 7.31
Westpac Banking Corp. 8.01
ING Bank NV 7.9
Mizuho Research Institute Ltd. 7.8-7.9
CFC Seymour Ltd. 7.75

Median (27 forecasts) 7.78
Average (27 forecasts) 7.73
High 7.00
Low 8.04


To contact the reporter on this story:
Christina Soon in Singapore csksoon@bloomberg.net

Last Updated: February 8, 2006 11:08 EST