I looked him over. Tanaka was beating about the bush. Why? Maybe it was merely the Japanese style, but he also seemed to know exactly what not to say.
"I'm still waiting to hear what's next."
"Very well. As long as you're here . . ." He sipped calmly from his cup. "It is common knowledge that Japanese savers have become the world's largest lenders, with overseas investment that now exceeds, by the way, the greatest rate of lending by OPEC even at its peak. The Japanese people will have over a trillion dollars in overseas assets within the next few years."
"I'm familiar with the numbers." I also knew that with several trillion dollars in spare change sloshing around back home, they were sending abroad a mere dribble of what they had.
"Were you also aware that over four fifths of our overseas investment is currently in dollar-denominated instruments?"
"No surprise. The dollar's still the name of the game, worldwide."
"True enough, but we at Dai Nippon are concerned that so many of our institutions have such heavy exposure in a single currency. Accordingly, in addition to our program with interest- rate futures, we also feel it would be prudent to provide some protection for this currency risk. In the same manner, I might add, that American investors often do."
"You mean some downside protection? On the dollar?"
"That is correct. A devaluation or a sudden drop in exchange rates would jeopardize much Japanese capital. Therefore we feel it would be prudent to enter the currency-futures markets to cover at least some of the dollar exposure of our investors."
Jesus! I suddenly needed a Valium. In addition to Treasuries, now Dai Nippon was about to short the dollar, pre-sell it in advance of . . . of what?