Currencies
The yen rose this week against the dollar as traders speculated that the Bank of Japan would be hard-pressed to resuscitate the economy by attempting to weaken its currency. The Japanese yen has gained 1.3 percent versus the dollar in the past five trading days, its biggest increase in about 10 weeks. The yen rose in value by talk of repatriation. It is estimated that several billion dollars worth of U.S. treasury coupon payments could be exchanged into yen ahead of the end of the business year on March 31st. The yen is expected to appreciate as banks are forced to consolidate balance sheets. Repatriation of foreign assets is likely to become the dominant market theme over the next few weeks.

The dollar rose for a third week in four against the euro. The dollar has traded in a range of about 2.5 U.S. cents over the past four weeks, a sign that traders are less willing to make big bets until the situation over Iraq becomes clearer. A war with Iraq may derail a recovery in the U.S. economy, making it harder to attract the foreign investment needed to plug the shortfall in the country's current account and sustain the dollar's value.

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