950803

IMM currencies close

sharply down

CHICAGO: IMM currency futures ended sharply lower after falling dramatically in the morning on Wednesday.

The market opened down after overnight news of a Japanese deregulation plan aimed at spurring international investment, and then fell dramatically with repeated intervention by the Federal Reserve and the Bank of Japan.

The moves boosted the dollar sharply, sending the yen down $0.000355 to $0.011068 by the close.

The Canadian dollar countered the trend, rising in reaction to both a stronger US dollar and to the potential for increased Japanese investment, traders said.

"It's been a very important day," one trader said. "They were able to sustain the (dollar) above 90 (yen) throughout the day. That's been a target for four months." That level is equivalent to $0.011183 in September yen.

September marks, yen, and Swiss francs hit session lows after the Fed and Bank of Japan bought dollars for marks and yen.

"Basically after eleven this morning it was like a different day," as the outside order flow into trading pits waned, said Bob Paprocki, currency analyst for Prudential Securities on the floor of the Chicago Mercantile Exchange.

Many floor traders now set a medium term objective for the dollar at 94 yen, equal to a target of $0.010714 on the Sept yen contract, he said.

Speculation that the Bank of England may raise rates over the next year, while Bundesbank will likely look to ease rates, underpinned sterling in morning trade and aided the British currency against other European units, particularly against the mark, he added.

"The Bank of England has been very adamant about trying to control inflation," he said. "It contributed to some of the strength of sterling on the crosses today."-Reuter