[A-List] Yen Crisis

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

"The sustained depreciation of yen exchange rate will cause currency
devaluation in many countries in Asia," predicted Dai Xianglong, the
president of the People's Bank ofChina (PBOC) on April 2, 2001.
According to him, the predicable depreciation of Japanese yen will put
impact on RMB, the currency of China, fixed at 8.2 to the dollar

Yesterday, December 24, 2001, the yen fell to 130.76 to the dollar,
reaching a new three year low since 1998.  The official People's Daily
carried an artivcle warning excessive yen devaluation as threatening a
new round of competititve devaluation among Asian currencies, causing
all Asian economies into new distress.

The yen has fallen by more than 4 per cent this month on a growing
belief that the authorities are willing to see the yen depreciate to
ease the struggles facing the country's beleaguered exporters.
Previously, officials have hinted to the market when they are satisfied
with the levelof the yen by threatening action if the currency's moves
become too dramatic.

The Japanese Finance Minister remarked recently that further falls of
the yen would be consistent with Japanese efforts to restructure its
economy.  The market interpretes these remarks as Japanese government
allowing the yen to fall to lower levels. The market anticipated the yen
to reach 135-136 levels within the next few months. With IMF and US
acquiesence, the yen may well fall to 160-170 levels.  In August 1998,
when the yen reached 147, Beijing threatened to devalue the RMB.
Washington and Tokyo staged a coordinated interevention to reverse the
yen's fall. The US wants to yen to stay above 120 and Japan wants the
yen to fall below 120.  But 160-170 would mean a total realignment of
the foreign exchange regime in Asia.

Its going to be a very interesting new year.

Henry C.K. Liu