Currencies
The dollar weakened against the euro and snapped a five-day rally against the yen on concerns that some U.S. companies may be hiding losses with accounting tricks. This dimmed the appeal of U.S. stocks and diminished the need for the dollars to buy them. The dollar dropped to 87.56 cents per euro on Friday from 86.98 on Thursday. The dollar also fell against the British pound and Swiss franc. Speculation that U.S. companies have been overstating profits has been a drag on the dollar of late. U.S. stock indexes have dropped since the start of the year.

February 28 is the last day for most national EMU currencies as legal tender - only the euro will be accepted from March 1.

The yen lost ground against the dollar last week after the Bush/Koizumi meeting produced no major policy initiatives. Adding to downward pressures were conflicting comments from Japanese officials, raising concern that the anti-deflation measures the government is due to announce Wednesday would not be strong enough to help the beleaguered economy. For the week, the dollar gained 1.1 percent against the yen as economic reports reinforced expectations that the U.S. economy is rebounding.

Traders said the yen is likely to take its tone from two events - Prime Minister Koizumi's deflation plan on Wednesday and the Bank of Japan (BOJ) meeting on Thursday. A well received plan may prompt yen buying. On the other hand, if the plan falls short of market expectations, the yen may weaken further, prompting more dollar and euro buying though traders warn that yen-repatriation would limit gains. If the yen sinks some financial institutions may liquidate foreign holdings and bring money home (i.e. repatriate), which could be yen supportive. But if Koizumi's plan is a hit, Japanese stocks could soar, potentially attracting foreign buyers - again yen supportive.

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