TheJapaneseYenAppreciates

October 1, 1999 -- Relative to the U.S. dollar, the Japanese yen continues to be the strongest international currency over the past 12 month period, followed by the Australian and Canadian dollars. One year ago the yen/dollar exchange rate was over 135 yen to the dollar. Today, the yen exchanges for about 104 yen to the dollar. The strong demand for the yen reflects the world's desire to purchase Japanese products and the expectations on the part of some international investors that the Japanese stock market will soon begin to recover.

When one currency moves way ahead of the others, the G-7 central banks are likely to undertake a coordinated effort to deliberately depreciate it. Watch for a bashing of the Japanese yen, either by the world's central banks or by speculators anticipating intervention. A strong yen acts as a drag on Japan's economic recovery, because its exports become more expensive. Depreciating the yen would help stimulate the ailing economy without causing too much inflation at this time because of the existing deflationary pressures and relatively high unemployment in Japan.

The table below shows the exchange rate index for selected country currencies over the past 12 month period. The Japanese yen, for example, has appreciated 30.7 % relative to the U.S. dollar. Over the same period, the euro zone country currencies have depreciated relative to the dollar by nearly 10 % on average.

The International Currency Horse Race

Win: Japanese Yen
Place: Australian Dollar
Show: Canadian Dollar

09-22-99: Past 12 Months Exchange Rate Index: U.S dollar = 100
Australia/dollar	......................112.3
Austria/schilling	.90.8
Belgium/franc	90.5
Britain/pound	.......96.9
Canada/dollar	..............104.0
Denmark/krone	.90.7
France/franc	90.6
Germany/mark	.90.9
Italy/lira	..91.8
Japan/yen	........................................130.7
Nether./guilder	90.4
Spain/piseta	90.4
Sweden/krona	......96.4
Switzer./franc	..91.5
U. S./dollar	..........100.0
Euro-11/euro	90.5