Please ignore the previous dispatch


Dollar Falls Below 107.79 Yen, Near 1-Month Low

TOKYO, March 18 (Reuters) -- The dollar fell below 107.79
yen on Thursday on growing speculation that Japan may be
easing its aggressive intervention policy. The U.S. currency
fell to around 107.75 yen, a level not seen since Feb. 20.

Dealers said the yen's upward trend would likely continue
given the current strength of the Tokyo stock market, where
the benchmark Nikkei average was trading up 1.55 percent
at 11,614.45.

* * *

Japan's Policy Shift May Be Result of U.S. Pressure

By Bloomberg News Service
Wednesday, Mach 17, 2004

Japan's Ministry of Finance has shifted its policy on currency
sales because of pressure from the U.S. Treasury, said
analysts including Paul Chertkow, head of global currency
research at the Bank of Tokyo-Mitsubishi Ltd. in London.

The yen has gained 3.6 percent against the dollar since March
8, when the currency fell to a five-month low of 112.33,
according to EBS prices. Japan sold record amounts of yen
last year in an attempt to cushion exporters from the dollar's
11 percent decline.

"There is a widespread suspicion that the change in foreign
exchange strategy was a result of U.S. pressure," Chertkow
wrote in a note to clients today. Japan has "reverted to its
tactic of intervening to temper the depreciation of the

U.S. officials tolerated Japanese yen-selling in advance of the
Group of Seven meeting in Florida on Feb. 7 because many
investors had accumulated so-called short dollar positions,
which benefit from a weakening dollar, on the expectation it
would extend its drop after the meeting, Chertkow said.

The Treasury Department was less relaxed about the Ministry
of Finance's extended sales once the yen began to drop after
the G-7 meeting, encouraging investors to place bets
benefiting from a stronger dollar, he said.

Treasury's concern intensified after Japanese currency sales
caused the dollar to rise against the yen after a report on
March 5 showed the U.S. added fewer jobs than expected in
February. The euro rose 1.6 percent against the dollar on that
day, the British pound 1.2 percent, and the Australian dollar
climbed 1 percent. By contrast, the yen fell 0.8 percent
versus the dollar.

"Large-scale intervention by the Bank of Japan in response
to the much weaker-than-expected payrolls report was
regarded by the United States as action out of line with U.S.
fundamentals," said Chertkow, who was head of global
currency research at UBS AG before joining the Bank of
Tokyo-Mitsubishi in 1998.

Japanese authorities may have received "a symbolic tap on
the shoulder" from U.S. or European officials requesting they
ease efforts to waken the yen, said Greg Anderson, senior
currency strategist at ABN Amro Holding NV. in Chicago.

Bank of Tokyo-Mitsubishi, among the banks that trade with
the Bank of Japan, predicted in December that the yen will
trade at 110 by year-end. Chertkow's team was the third-most
accurate forecaster of exchange rates in the fourth quarter
among 56 companies surveyed by Bloomberg News.

"No one has devalued their way to prosperity," U.S. Treasury
Secretary John Snow said in a March 8 speech to the
National Association of Treasurers in Washington, the
Monday after the jobs report. "It's important that currencies
reflect demand and supply."

"We do not comment on specific market activity by foreign
governments," Treasury spokesman Rob Nichols said today.

Chertkow, who now predicts the yen will strengthen to 105
per dollar, said Snow's remarks were probably aimed at

Japan sold a record 20.5 trillion yen ($188 billion) last year
and 10.5 trillion yen in the two months through Feb. 25,
according to government figures, in an effort to keep the
yen from gaining too quickly and crimping exporters' earnings.

Sales are "aimed at preventing speculative moves and
overshooting," and "not to weaken the yen," Japanese Finance
Minister Sadakazu Tanigaki said today at a budget committee
meeting in the upper house of parliament in Tokyo.

Japan may also be scaling back currency sales because the
market for U.S. Treasuries has been "quite steady" since March
8, Toshi Honda, a strategist in London at Mizuho Corporate
Bank, part of Japan's largest lender. Japan tends to purchase
Treasuries with the dollar proceeds from its currency sales.

"With bonds steady, the Japanese don't have as much of a
green light to intervene" as when they are falling, and the
U.S. is content for Japan to support them, Honda said. The U.S.
10-year benchmark government note yielded 3.70 percent at
12:12 p.m. in New York, compared to 3.77 percent on March 8.

As of the end of January, Japan held $577 billion of U.S.
Treasuries, up from $465 billion at the end of August,
according to Treasury Department figures released on

Currency speculators have recently switched to betting the
yen will fall instead of rise, Honda said, giving the Japanese
government less justification to sell, Honda said.

Futures traders bet for a third week that the yen will fall
against the dollar, figures from the Washington-based
Commodity Futures Trading Commission show. Yen net
shorts increased to about 35,000, from about 22,300 a
week earlier.

* * *

Oil Ends At Highest Price In 13 Years;jsessionid=WQ5MZHKVMLG0UCRBAE

NEW YORK, March 17 (Reuters) -- U.S. oil prices roared
to their highest closing in more than 13 years on Wednesday
as a drop in already low gasoline inventories sharpened the
threat of a supply crunch that could hurt economic growth.

U.S. light crude futures rose 70 cents to settle at $38.18 a
barrel, nearly two percent higher. In London, May Brent crude
ended 85 cents, or 2.6 percent, up at $33.53.

It was the highest settlement for U.S. crude since October

Prices jumped after the Energy Information Administration,
an arm of the U.S. Department of Energy, released its latest
snapshot on the world's biggest oil market. The report showed
a further 800,000 barrels decline in gasoline stocks to 199.6
million barrels.

U.S. gasoline supplies are running 5 percent below the
five-year average, sparking concerns refineries will struggle
to build supplies in time for summer holiday driving demand.

"What we're seeing now is that some funds had moved to the
side making sure there wasn't a bearish surprise and now
they are rotating back into the long side," said Jim
Ritterbusch, president of Ritterbusch and Associates.

U.S. light crude prices have averaged almost $35 a barrel so
far in 2004, well above 2003's average price of $31, which
was the highest in more than two decades.

At the day's settlement, crude futures had risen $4.31, or
nearly 13 percent, since Feb. 10, when OPEC decided it
would cut official production quotas by 4 percent from April

OPEC cuts plans and rocketing Asian demand from China
and India have combined to push prices to levels which
consuming countries fear could hurt economic growth.

The head of Germany's export industry association said on
Tuesday that oil prices pose a bigger risk to Germany's
economic recovery than the euro's exchange rate.

The surge in price led the United States to spend an extra
$200 million on oil in January versus December, even though
it imported eight million fewer barrels, according to the U.S.
Commerce Department.

In January, the U.S. trade deficit widened to a record $43.1
billion. Economists say the oil price surge was the spoiler.

OPEC ministers agreed last month to eliminate 1.5 million
barrels per day of supply above existing quotas and cut
official production limits in April by one million bpd to 23.5
million barrels per day.

While most OPEC ministers have said they intended to
implement the April cuts, there have been few signs of
cutbacks in March.

Tanker tracking consultant Petrologistics has told clients
it expects the 10 OPEC members with quotas to produce
25.63 million barrels a day in March, down just 150,000
bpd from 25.78 million bpd in February.

One OPEC member, Nigeria, has already apparently reversed
its initial cutback plan and added up to 250,000 bpd of extra
crude at the last minute for April exports.


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