Hong Kong's secret strength

[Doyle Saylor]

Hello everyone,
	Chris Burford August 1, 1998 writes:
"Furthermore speculators like Soros most certainly were gambling on the
fall of the Hong Kong dollar, but the Hong Kong government did
absolutely nothing to commit its massive reserves to support the
exchange rate. There was therefore no profit to be made (unlike the
scenario when Soros pocketted billions from the desperate actions of the
British Conservative Chancellor of the Exchequer, Lamont). They were
getting their fingers burned and they withdrew. Furthermore my informant
suggests that it is likely that the Hong Kong regime which has never
interferred in exchange rates in this way, probably advised the PRC not
to interfere either, if they needed any advising."

Doyle
I saw this in June concerning the Chinese Yuan and currency speculation. 
Appearing in the Australian press, "The Age" June 11, 1998, by Malcolm
Maiden

"
Australia's foreign reserves total $A20.8 billion, an internationally
respectable amount that puts the nation in the same league as many big
industrialised nations, including Austria ($US20.2 billion) Britain
($US30.4 billion) and Canada ($US22.3 billion).

But the speculative hedge funds are estimated to have the combined power
to deploy about $US300 billion around the world."


" According to the Australian sources monitoring the situation, the
funds are writing contracts to sell the Australian, New Zealand,
Singapore and Hong Kong dollars, while also selling Japan's yen, which
this year has already depreciated by 8 per cent. Soros funds are rumored
to have contracted for the future sale of $A6 billion and $NZ7 billion.

The hedge funds believe that if the yen moves above 150 yen to the US
dollar, China will devalue the yuan in a bid to restore the price
competitiveness of its exports."


" China has deep foreign currency reserves of about $US120 billion to
use in the yuan's defence. But its trading edge has been blunted since
mid-1997 by the Asian crisis. The yuan's exchange rate has remained
fixed while other Asian currencies have devalued sharply, and Indonesian
exports are, for example, now five times cheaper than Chinese ones in US
dollar terms."

Doyle
Before His visit to China, Clinton authorized massive intervention to
prop up the yen, which was counter to the advice of treasury secretary
Rubin.  It seems to me that it is very useful to keep in mind this
amount of 150 yen to the dollar.  There are wide spread reports in the
business press that by fall the yen will go above the 150 level.

By Carl Gewirtz International Herald Tribune
Paris, Saturday, June 20, 1998

"Support of Yen Came Without Quid Pro Quo"...

''There is no new plan,'' Philippa Malmgren at Bankers Trust, said of
Japanese policymakers. ''They have nothing to announce.'' 
...
''It's increasingly apparent that the U.S. decision to intervene wasn't
made by Treasury Secretary Rubin but by President Clinton,'' Ms.
Malmgren said. Prodded by the U.S. State Department, which feared the
president would be embarrassed if China devalued its currency while he
was there on a state visit, she said Mr. Clinton initiated the overture
to Prime Minister Ryutaro Hashimoto to intervene to halt the yen's
decline without receiving any specific commitment on what the Japanese
would do in turn.

 ''Mr. Clinton has put the Treasury in a terrible position,'' she said.
''The United States has delivered what it has to offer, but Japan has
nothing new to offer.'' 

  Mr. Persaud said, ''So long as the Bank of Japan has a bias to ease
monetary policy and further lower interest rates, and so long as the
Federal Reserve has a bias to tighten policy and nudge up interest
rates, intervention to strengthen the yen is destined to fail.''..."

Doyle
To finish up, it seems to me that Chris Burford's equanamity about a
Chinese (and Hong Kong) devaluation should be tested some time in the
next three months when the Yen passes the 150 barrier.  In addition the
business press today was pointing at the Canadian currency moving toward
a crisis of confidence, and the Washington Post was running an article
about a worst case collpase in Asia.
regards,
Doyle Saylor