Japan: Yen up on bank foreign asset repatriation rumours

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Thursday, March 15 11:11 AM SGT

Yen up on bank repatriation rumours TOKYO, March 15 (AFP) - The yen rose in Tokyo Thursday on expectations of demand for the currency from Japanese banks ahead of the fiscal year-end on March 31, after a new alarm was sounded over their financial health.

Banking stocks on the Tokyo Stock Exchange were hammered after credit risk appraiser Fitch IBCA warned it might downgrade the lenders' ratings because of their mountainous bad loans and the impact of the slumping bourse.

The banks "are not actually repatriating funds yet," Sanwa Bank currency dealer Takanori Tsutsumi said.

But "as the Nikkei is below 12,000 and Fitch has warned of a downgrade of the Japanese banks, they have to do something to increase their capital within this financial term to March," he said.

As a result, the dollar fell to 120.83-87 yen at 11:00 am (0200 GMT), down from 121.07 yen in New York, but up from 119.87-90 yen in Tokyo late Wednesday.

"The Nikkei fall is inflating the losses of Japanese banks, and encourages them to sell foreign-currency assets," said Sanwa Bank dealer Mitsuru Sahara.

Share prices in Tokyo fell 1.4 percent with plunging banking issues sending the Nikkei-225 index down 169.27 points to close the morning session at 11,674.32.

Overnight tumbles on Wall Street also pressured the dollar with both the Dow Jones industrials and Nasdaq slumping through key psychological support barriers.

"Dollar/yen didn't move so much even though investors had expected Japanese share prices to fall as much as US ones," Mitsubishi Trust and Banking dealer Yasuharu Tsuru said.

Investors shrugged off a report in the Nihon Keizai Shimbun saying the Bank of Japan may return to its "zero-rate" policy amid deepening gloom over global economies when it convenes on Monday.

"Investors did not react to the news," said ABN Amro senior trader Toshiyuki Takamatsu. "Investors are wary of the business outlook of Japanese banks and interest rates are already low.

"You might as well have the dollar" instead of the yen, Takamatsu said, adding the dollar might rise to 122 yen by the end of next week.

The euro meanwhile bought 0.9109 dollars around 11:00 am, up from 0.9100 dollars in New York and 0.9085-88 dollars in Tokyo Wednesday afternoon.

Against the yen, the euro bought 110.06, down from 110.17 in New York but up from 109.26 in Tokyo late Wednesday.

"There was not much of a lead for the euro," said Tsuru at Mitsubishi Trust and Banking.

http://asia.dailynews.yahoo.com/headlines/business/article.html?s=asia/headlines/010315/business/afp/Yen_up_on_bank_repatriation_rumours.html

-- Carl Jenkins (somewherepress@aol.com), March 15, 2001


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