SINGAPORE, November 27: Big moves in the yen may be over for 1997 as selling prompted by problems in Japan is offset by the repatriation of overseas assets by Japanese firms, a Reuters poll of 22 foreign exchange traders in Asia and Europe found.

The selling pressure could also be eased by a reluctance to build speculative positions as the year-end approaches, the survey showed.

The survey, carried out this week after the collapse of several financial institutions including Japan's oldest brokerage Yamaichi Securities, found that most dealers expect the yen to drift lower in value against the dollar with the median forecast by year's end at 130 yen to the US dollar.

This compares with the current rate of around 127.00 at 0730 GMT."I don't rule out a spike in dollar/yen, but right now I wouldn't be surprised to see it being capped out around these kind of levels," said Chris Tinker of ING Baring Securities in Hong Kong.

The Reuters survey found that the market players were still worried about the outlook for the yen with some couching their forecasts with riders that more bad news from Japan could change things quickly.

Karen Pringle, treasury economist at the ANZ Bank, said that the bank was looking for dollar/yen to be around 133.00 by early next year.

"Japan has no room for manoeuvre on monetary or fiscal policy, so the only way it can generate growth is through exports," she said. "And that requires a depreciating currency if it is to stay competitive against its Asian neighbours."

The National Australia Bank (NAB) was staying basically optimistic for now, but was keeping its options open on a more bearish prospect. The NAB has a forecast of 125.00-130.00 for the year-end and then a very slow recovery to 121.00 by the middle of 1998 as confidence returns.

"Officially our forecast is 125.00 to 130.00 but with conditions so volatile almost nothing can be ruled out," said Spiros Papadopoulos, a treasury economist there. "If a major Japanese bank fails, for instance, then 140.00 would not be far-fetched."

Australia's Macquarie Bank said that it has a formal target of 128.00 for the year-end. But Richard Gibbs, the bank's international economist, said: "The risks are on the downside. We don't see the 140.00 some are predicting but you can't rule out 135.00 if the financial situation deteriorates much further."

There are counter forces at work in as much as failed institutions like Yamaichi will be liquidating offshore assets and taking yen home," he said.Westpac forecast 128.00-130.00 by year-end and then a rise to 119.00 by the middle of next year.

"Dollar/ yen is a nightmare to forecast," said Helen Camp of Westpac. "It's so policy-driven if the authorities do take decisive steps we could see 115.00 mid next year. If they don't we could see She said that the firming argument rested centrally on a package delivering a commitment to use public funds for the system.

Officials from the ruling Liberal Democratic Party (LDP) in Tokyo are finalising details of a package of measures to stabilise Japan's financial system due to be announced on December 10.

The LDP has also said that it plans a third package of economic boosting measures on December 16.

In Tokyo, the view was that the slowness of the Japanese government's efforts to deal with the financial problems would keep the yen under pressure.

"Since there is a widespread belief that it will take time before the government stabilises the nation's financial system, the dollar's uptrend will stay intact in the coming months," a senior dealer at Sumitomo Trust & Banking said.

The dealer said that he expected the dollar to rise to 130.00-132.00 yen at the end of this year.

Hank Note, senior vice-president at Sumitomo Bank, said that the yen's bearish trend was likely to persist until the government decided to use public funds to protect Japan's financial system.

Ultimately, though, many traders hold out the possibility that Japan might impress markets with its dealing of the domestic financial problems.

"Sorting out the Japanese financial system is going to be seen as positive and if tough decisions are taken that will be seen as supportive for the market, and that will in turn help stabilise sentiment in the currency," said Tinker of ING-Barings.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.