Shaw Capital Management: Shaw Receives Full Notice to Proceed on Duke Energy's Dan River Combined Cycle Plant

BATON ROUGE, La., Mar 01, 2011 (BUSINESS WIRE) -- The Shaw Group Inc. (NYSE: SHAW) today announced it received full notice to proceed on a new gas-fired facility at Duke Energy's Dan River Steam Station in North Carolina.

Scheduled to begin operation in late 2012, the new 620-megawatt natural gas-fired combined-cycle generating unit will replace two older units at the facility. At the peak of construction, the project will employ more than 400 workers.

"This project demonstrates Duke's commitment to providing cleaner energy and jobs for its local communities," said Clarence Ray, chief executive officer of Shaw's Power Group. "Shaw is proud to help Duke ensure an affordable, reliable and cleaner energy supply for the future."

In March 2010, Duke awarded Shaw an engineering, procurement, construction and commissioning services contract for the construction of the new facility, and Shaw began working under a limited notice to proceed.

The undisclosed value of the contract will be included in Shaw's Power segment's backlog of unfilled orders in the second quarter of fiscal year 2011.

Also as a part of Duke's long-term plan to add new generation, modernize the fleet and maintain a diverse fuel portfolio, Shaw is constructing a new 620-megawatt gas-fired unit at Duke's Buck Steam Station in North Carolina, which is scheduled for completion in late 2011. The similarities and close timing of the two projects allow for maximum use of design replication and other synergies that are resulting in significant savings to Duke Energy.

The Buck and Dan River projects will use state-of-the art environmental control technology to minimize plant emissions. These controls, combined with the retirement of the older units on the two sites, will help reduce environmental emissions of NOX and SO2 at the sites.

The Shaw Group Inc. (NYSE: SHAW) is a leading global provider of engineering, construction, technology, fabrication, remediation and support services for clients in the energy, chemicals, environmental, infrastructure and emergency response industries. A Fortune 500 company with fiscal year 2010 annual revenues of $7 billion, Shaw has approximately 27,000 employees around the world and is the power sector industry leader according to Engineering News-Record's list of Top 500 Design Firms. For more information, please visit Shaw's website at www.shawgrp.com.

This press release contains forward-looking statements and information about our current and future prospects, operations and financial results, which are based on currently available information. Actual future results and financial performance could vary significantly from those anticipated in such statements.

Among the factors that could cause future events or transactions to differ from those we expect are those risks discussed in our Annual Report on Form 10-K for the fiscal year ended August 31, 2010, our Quarterly Reports on Form 10-Q for the quarters ended February 28, 2010, May 31, 2010 and November 30, 2010, and other reports filed with the Securities and Exchange Commission (SEC). Please read our "Risk Factors" and other cautionary statements contained in these filings. Our current expectations may not be realized as a result of, among other things:

•             Changes in our clients' financial conditions, including their capital spending;

•             Our ability to obtain new contracts and meet our performance obligations;

•             Client contract cancellations or modifications to contract scope;

•             Worsening global economic conditions;

•             Changes to the regulatory environment;

•             Litigation or arbitration decisions;

•             Failure to achieve projected backlog.

As a result of these risks and others, actual results could vary significantly from those anticipated in this press release, and our financial condition and results of operations could be materially adversely affected. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, the occurrence of certain events or otherwise.

SOURCE: The Shaw Group Inc.

Media and Financial Contact:

The Shaw Group Inc.

Gentry Brann, 225-987-7372

gentry.brann@shawgrp.com

Shaw Capital Management: Japan’s Economic Growth Slowed Again Part 2: Shaw Capital Management Article

Japan’s Economic Growth Slowed Again Part 2: Shaw Capital Management Article - Japan’s economic recovery appears to have faltered unexpectedly sharply during the second quarter of this year. The government’s preliminary GDP statistics put the real quarter-to-quarter growth rate at 0.1%, which translates into an annualised 0.4%, marking an expansion for the third consecutive quarter.

It is well-known that Japanese GDP data are volatile and subject to drastic revisions in both directions. Nevertheless, these data suggest that the economy has slowed considerably.

Japan’s Economic Growth Slowed Again Part 2: Shaw Capital Management Korea - This has raised concern that the nation’s economic recovery may come to a standstill in the latter half of the fiscal year in the midst of an evident global slowdown of recovery.

Shaw Capital Management Korea Newsletter - Export growth is expected to weaken in line with the slowing of world trade and recent strength of the yen. Even the Chinese economy is slowing down. On the other hand, corporate profits have been good, but the appreciation of the yen and stagnation in the domestic market might reduce the appetite of Japanese firms for investment at home. Indeed, private machinery orders, an indicator for capital investment, have been very weak. There are increasing signs that many firms are sending more of their production offshore.

Shaw Capital Management Korea - Under these circumstances, the government is reported to have started considering an additional stimulus package to deal with the appreciation of the yen, the decline in stock prices, and deflation.

Prime Minister Naoto Kan will have a talk with State Minister for National Policy Satoshi Arai, Minister of Finance Yoshihiko Noda, and Minister of Economy, Trade and Industry Masayuki Naoshima on the shape of a new package, which may be announced in early September, according to the press.

Shaw Capital Management Korea Newsletter - Economists and observers criticized the government, and the central bank, for failing to take appropriate measures and urged them to craft bolder policies to decisively face up to the wobbly state of the economy. In particular, they emphasized the importance of preventing any further appreciation of the yen and demanded that the government and the Bank of Japan act first of all to put a brake on the yen’s rise in preparation for the growing fear of a second dip in business.

“The yen’s rise not only squeezes exporters’ profits but also, if left as it is, will encourage manufacturing companies to shift production bases outside Japan, resulting in an irrevocably adverse influence on employment and other segments.

Shaw Capital Management Korea Newsletter - The Finance Ministry should not hesitate to intervene in the foreign exchange market”, said Hideo Kumano, chief economist at the Dai-ichi Life Research Institute. With the currency recently rising to a 15-year high against the US dollar, speculation has increased that Japanese authorities may act soon to slow the surging yen. BOJ officials have opposed the idea of more aggressively using their balance sheet because of worries that it could increase market concerns about Japan’s fiscal discipline and that the anti-deflation drug could prove too effective, causing prices to rise out of control. Many analysts believe that the BOJ will make a move in the foreign exchange market soon.

Shaw Capital Management: Debit Policy is Working Well in UK & US Part 1 of 2

 World wide recovery appears to have firmed up. In the UK the statistics have lagged behind the anecdotal signs of the same thing. No one still believes the ONS’s peculiar decision to call a revised GDP drop of 0.2% in the third quarter (now revised down from an initial estimate of 0.4%). The UK now have not merely surveys of purchasing managers but also employment, production and retail sales figures, all of which suggest that the economy levelled off in the third quarter and could have possibly also

started expanding then, and was definitely expanding in the fourth. The most troubling aspect of the recovery in western economies including the UK is the lack of credit growth to the non-bank private sector. However, this has been accompanied by a general easing in monetary conditions, as

measured by other indicators, such as rates of interest on corporate loans and bonds, and the cost of equity capital.

Shaw Capital Management Korea: Debit Policy is Working Well in UK & US - So it appears that the policy easing carried out by virtually all western central banks has succeeded in offsetting at least much of the effects of the credit crunch created by the banking crisis.

Another feature has been the willingness of western governments to allow their budget balances to move into heavy deficit.

The way to think of this is that governments will eventually have to pay off these deficits by either cutting spending services to the private sector or raising taxes on it. Hence these deficits are loans to the private sector to perform current services or avoid collecting current taxes; these loans will be paid off in the future. The government is effectively giving credit to the private sector that has dried up through the usual channels.

Shaw Capital Management Korea: Debit Policy is Working Well in UK & US - Some people would like to debate whether such government deficits are effective in supporting the economy; however it should be obvious that in a credit crunch all credit provision is likely to be effective in offsetting the credit shortage. One can agree that in normal times deficit multipliers could well be low because rational consumers will work out that they must pay future taxes to pay for the deficits and hence they may well save in response, so offsetting the direct deficit stimulus.

However in a credit crunch this argument is irrelevant because the private sector is liquidity-constrained. So monetary and fiscal policy have both been dominated by the need to provide a substitute for bank credit. They have done so and been rather effective in this.

Shaw Capital Management Korea: Debit Policy is Working Well in UK & US - As long as the recovery does not raise inflation and require interest rates to rise, and money creation to be stopped and reversed, the government deficits have been costless because financed by money creation at zero interest rate therefore.

The burning question is when is the turning point, when ‘monetary exit’ must be started, turning these deficits into expensive processes that could violate sustainability conditions, and hence precipitating the necessity of fiscal exit also.

From the UK or US perspective there is no real reason to rush to the exit.  Both countries’ public debt/GDP ratios are quite low, in the region of 50 80% respectively. There is no history of outright default, or of refusal to pay taxes. The main issue concerns the possibility of using inflation as a partial default tool.

Shaw Capital Management Korea: Debit Policy is Working Well in UK & US - In the UK there has been a formal inflation target of 2% or so for 17 years; in the US there is no formal target but a widespread assumption encouraged by the Fed that there effectively is one of the same order. Since debt has been issued over a long period on the assumption of such a target, the gain to the Treasury from a burst of inflation would be large; it would act like a windfall tax on bond investors.

For example to reduce the debt/GDP ratio in the UK back to 40% from its current level of 56% would just require four years of inflation at 6%, only 4% over the target.

Shaw Capital Management Korea: Debit Policy is Working Well in UK & US - Tempting as this might sound, it is striking how little public interest there is in it. Inflation was highly unpopular in both countries when it was out of control in the 1970s and early 1980s; inflation targeting has proved politically successful for this reason.

Shaw Capital Management: Shaw Capital Awarded Contract for Proprietary Technology and Engineering for New Ethylene Plant in India

 Get the latest news and learn about how Shaw capital and its management help clients go green, avoid scam, fraud and designed to help customers achieve regulatory compliance, reduce environmental impact and create long-term benefits.

BATON ROUGE, La., Dec 08, 2010 --The Shaw Group Inc. (NYSE: SHAW) today announced it has been selected by GAIL (India) Limited (GAIL) to provide its proprietary technology and basic engineering for a new 450,000 tons per annum ethylene plant. Shaw also will provide support during detailed engineering, procurement and construction, and commissioning and startup of the plant, which will be part of GAIL's petrochemical complex in Pata, Uttar Pradesh, India.
Get the latest news and learn about how Shaw capital and its management help clients go green, avoid scam, fraud and designed to help customers achieve regulatory compliance, reduce environmental impact and create long-term benefits.
"Shaw provided technology and basic engineering for GAIL's first 400,000 tons per annum ethylene plant at Pata in the late 1990s. The performance of that plant, coupled with our ability to integrate it with the new parallel plant, will result in capital and energy savings for our customer," said Lou Pucher, president of Shaw's Energy & Chemicals Group.
The undisclosed value of the contract was included in Shaw's Energy & Chemicals segment's backlog of unfilled orders in the first quarter of fiscal year 2011.
Shaw has designed and/or built more than 120 grassroots ethylene plants worldwide. Five of those plants are in India, where Shaw also has participated in numerous projects to revamp or expand existing facilities. Shaw recently announced full commercial operation of a 1.3 million metric ton per year ethylene plant for Eastern Petrochemical Company (SHARQ) in Al-Jubail, Saudi Arabia.
The Shaw Group Inc. (NYSE:SHAW) is a leading global provider of engineering, construction, technology, fabrication, remediation and support services for clients in the energy, chemicals, environmental, infrastructure and emergency response industries. A Fortune 500 company with fiscal year 2010 annual revenues of $7 billion, Shaw has approximately 27,000 employees around the world and is the power sector industry leader according to Engineering News-Record's list of Top 500 Design Firms. For more information, please visit Shaw's website at www.shawgrp.com.
This press release contains forward-looking statements and information about our current and future prospects, operations and financial results, which are based on currently available information.Actual future results and financial performance could vary significantly from those anticipated in such statements.
Among the factors that could cause future events or transactions to differ from those we expect are those risks discussed in our Annual Report on Form 10-K for the fiscal year ended August 31, 2010, our Quarterly Reports on Form 10-Q for the quarters ended November 30, 2009, February 28, 2010, and May 31, 2010, and other reports filed with the Securities and Exchange Commission (SEC).Please read our "Risk Factors" and other cautionary statements contained in these filings.Our current expectations may not be realized as a result of, among other things:

• Changes in our clients' financial conditions, including their capital spending;
• Our ability to obtain new contracts and meet our performance obligations;
• Client contract cancellations or modifications to contract scope;
• Worsening global economic conditions;
• Changes to the regulatory environment;
• Failure to achieve projected backlog.

As a result of these risks and others, actual results could vary significantly from those anticipated in this presentation, and our financial condition and results of operations could be materially adversely affected. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, the occurrence of certain events, or otherwise.

Shaw Capital Management: Lack of Raw Material and the World Economy: Shaw Capital Management Article

Shaw Capital Management Korea News Release - We have seen major developing economies like China and India apply the brakes earlier this year, as inflation grew on the back of commodity shortages. World growth was running at 4.5%, only 1% or so below the record growth rates of the mid-2000s. This was too fast for raw material supplies to accommodate with current technology.

Lack of Raw Material and the World Economy: Shaw Capital Management Article  - World productivity growth has been slowed down by this raw material shortage … this in our view was the cause of the sharp slowdown in 2006 which in its turn caused the collapse of demand for houses in the US and so the sub-prime crisis.

It will take a decade for new technology and possibly new supplies to allow renewed productivity growth; with plentiful supplies of raw materials this was the era of computer-led growth in productivity.

As growth has been slowed worldwide, so already slow growth in developed countries has slowed even further. This is inevitable.

Lack of Raw Material and the World Economy: Shaw Capital Management Article - If these countries were to speed up, demand for commodities would rise faster, spurring sharp price rises, which in turn would force them to slow back down.

It is convenient to focus on shortage of credit and excess debt post-banking crisis. But the fundamentals would not permit much growth even if there were plenty of credit and no debt; if the latter situation were the case, then monetary policy would need to tighten. As it is monetary policy can remain easy with the banks in endless disarray.

Seen against this background, the slowdown is natural and should not surprise us. Equally natural is that equity markets are settling, while bond yields fall, with inflation being held down and return on capital depressed by slow productivity growth.

Shaw Capital Management Korea: However, none of this implies a return to recession in OECD countries. This would be prevented by a return to quantitative easing and even a deferral of fiscal tightening. Governments and central banks in the OECD are under no pressure from inflation to force down activity. Debt/GDP ratios are rising and this is forcing fiscal tightening. But the pace of this is a matter of choice.

Shaw Capital Management Korea: “As far as monetary policy is concerned, the need remains to stimulate recovery of the banks since they remain the primary channel of intermediation”

Furthermore there are investment opportunities in the present environment: high returns to technological advance in commodity use, for example, and to exploration for new sources of supply.

Exports are growing well, as capital goods flow to the fast-growing developing world. Consumption is no longer depressed but rather beginning to grow.

As far as monetary policy is concerned, the need remains to stimulate recovery of the banks since they remain the primary channel of intermediation, despite all the ways in which firms and individuals have managed to find alternative finance sources since the banking crisis.

This points to further quantitative easing. Interest rate policy has become irrelevant; the rates at which private loans are being made bears little relation any more to the rates of interest on government short-term loans.

Lack of Raw Material and the World Economy: Shaw Capital Management Newsletter - The very low rates central banks are charging banks for loans are merely a subsidy to banks; better instead to release banks from the neurotic demands currently being made by regulators for much more capital, for greater caution in loan-making and so on.

Meanwhile it is time to restore official interest rates to their proper function as regulators of the private rate of interest; they should now be raised towards more normal rates.

Shaw Capital Management: Shaw Capital Management Korea: Japan’s Economic Growth Slowed Again Part 1

Japan’s economic recovery appears to have faltered unexpectedly sharply during the second quarter of this year. The government’s preliminary GDP statistics put the real quarter-to-quarter growth rate at 0.1%, which translates into an annualised 0.4%, marking an expansion for the third consecutive quarter.

Shaw Capital Management Korea: Japan’s Economic Growth Slowed Again Part 1 - This represents, however, a striking slowdown from the 0.4% quarterly growth, or annualised 4.4% growth, recorded in the preceding three months. It also fell far short of the median forecast of private-sector economists of annualised 2.3% growth over the preceding period.

Moreover, in nominal terms Japanese GDP has fallen behind China’s: US$1,336.9 billion for China against US$1,288.3 billion for Japan for the quarter.

Shaw Capital Management Korea: Japan’s Economic Growth Slowed Again Part 1 - Looking at individual demand components, the domestic economy was sluggish, with the exception of private capital expenditure. Private non-residential investment grew by 0.5%, almost the same as in the previous quarter, on the back of improved profits. However, private residential and government investment spending declined sharply by 1.3% and 3.4%, respectively.

Shaw Capital Management Korea: Japan’s Economic Growth Slowed Again Part 1 - The contribution of inventories to GDP growth declined by 0.2 points. This is a bit surprising given the acceleration in imports, and might indicate that there is still room for an upward revision of growth at the next release.

Officials were particularly disturbed by the slowdown of personal consumption. Although the growth in consumer spending had been shored up by the government subsidies, such as those for the purchase of energy-efficient cars and the eco-point incentive program for purchasers of eco-friendly home electric appliances, the effects of these policies apparently wore off during the quarter.

The eco-car subsidies and eco-point system are due to end by the end of September and the end of this year respectively. Meanwhile, even though major corporations are awash with cash, they are extremely cautious about capital investment in view of uncertainties about the domestic and overseas economic situation.

Shaw Capital Management Korea: Japan’s Economic Growth Slowed Again Part 1 - Exports, the prime driver of growth, rose 5.9% on strong demand from Europe. But the pace of growth slowed from a 7.0% rise in the previous quarter amid signs of an economic slowdown in China, one of the biggest destinations for Japanese exports.

It is well-known that Japanese GDP data are volatile and subject to drastic revisions in both directions. Nevertheless, these data suggest that the economy has slowed considerably.

Shaw Capital Management Korea: Japan’s Economic Growth Slowed Again Part 1 - This has raised concern that the nation’s economic recovery may come to a standstill in the latter half of the fiscal year in the midst of an evident global slowdown of recovery.

We provide the information, insight and expertise that you need to make the right investment choices. For more information on the issues in this newsletter, or for any further information, please don’t hesitate to contact us.

Shaw Capital Management Korea: World Economy and Raw Material Shortages

Shaw Capital Management Korea: World Economy and Raw Material Shortages - We have seen major developing economies like China and India apply the brakes earlier this year, as inflation grew on the back of commodity shortages.

World growth was running at 4.5%, only 1% or so below the record growth rates of the mid-2000s. This was too fast for raw material supplies to accommodate with current technology.

Shaw Capital Management Korea: - World productivity growth has been slowed down by this raw material shortage … this in our view was the cause of the sharp slowdown in 2006 which in its turn caused the collapse of demand for houses in the US and so the sub-prime crisis.

It will take a decade for new technology and possibly new supplies to allow renewed productivity growth; with plentiful supplies of raw materials this was the era of computer-led growth in productivity.

As growth has been slowed worldwide, so already slow growth in developed countries has slowed even further. This is inevitable.

If these countries were to speed up, demand for commodities would rise faster, spurring sharp price rises, which in turn would force them to slow back down.

Shaw Capital Management Korea: - It is convenient to focus on shortage of credit and excess debt post-banking crisis. But the fundamentals would not permit much growth even if there were plenty of credit and no debt; if the latter situation were the case, then monetary policy would need to tighten. As it is monetary policy can remain easy with the banks in endless disarray.

Seen against this background, the slowdown is natural and should not surprise us. Equally natural is that equity markets are settling, while bond yields fall, with inflation being held down and return on capital depressed by slow productivity growth.

Shaw Capital Management Korea: World Economy and Raw Material Shortages - However, none of this implies a return to recession in OECD countries. This would be prevented by a return to quantitative easing and even a deferral of fiscal tightening. Governments and central banks in the OECD are under no pressure from inflation to force down activity. Debt/GDP ratios are rising and this is forcing fiscal tightening. But the pace of this is a matter of choice.

Shaw Capital Management Korea: World Economy and Raw Material Shortages - “As far as monetary policy is concerned, the need remains to stimulate recovery of the banks since they remain the primary channel of intermediation”

Furthermore there are investment opportunities in the present environment: high returns to technological advance in commodity use, for example, and to exploration for new sources of supply.

Exports are growing well, as capital goods flow to the fast-growing developing world. Consumption is no longer depressed but rather beginning to grow.

Shaw Capital Management Korea: World Economy and Raw Material Shortages - As far as monetary policy is concerned, the need remains to stimulate recovery of the banks since they remain the primary channel of intermediation, despite all the ways in which firms and individuals have managed to find alternative finance sources since the banking crisis.

This points to further quantitative easing. Interest rate policy has become irrelevant; the rates at which private loans are being made bears little relation any more to the rates of interest on government short-term loans.

Shaw Capital Management Korea: The very low rates central banks are charging banks for loans are merely a subsidy to banks; better instead to release banks from the neurotic demands currently being made by regulators for much more capital, for greater caution in loan-making and so on.

Meanwhile it is time to restore official interest rates to their proper function as regulators of the private rate of interest; they should now be raised towards more normal rates.

Shaw Capital Management News -Foreign Exchange Markets 2010 Part 4

Prospects therefore remain disappointing, and are being made worse by the differences that exist between member countries. The European Central Bank therefore faces a difficult situation. It continues to forecast “moderate” growth and “moderate” inflation; but it is being severely criticised for failing to address the problems of a two-speed economy, and for its unwillingness so far to face the threat that the deteriorating situation in Greece could quickly begin to destabilise other member countries and have serious consequences for the financial stability and growth prospects of the entire area.

It is not surprising therefore that investors and speculators have started to reduce their exposure to the euro.

Shaw Capital Management News - Foreign Exchange Markets 2010 Part 4: - The critical question therefore is whether the fall of the euro is now over. Since the currency is unlikely to receive any real support from the general background situation in the euro-zone, everything depends on the developing debt situation, and particularly on the situation in Greece; and also on the possibility of support operations from stronger member countries and from the European Central Bank, and the European Commission. The situation remains uncertain. The central bank appears to be reluctant to offer help, and the German government, which might have been expected to become involved, has also made no response so far.

Shaw Capital Management News - But the European Commission has endorsed the latest plans by the Greek government to introduce an across-the-board freeze on public sector wages and cuts in allowances that are expected to reduce the overall public sector wage bill by around 4%.

This may encourage support from elsewhere; however the Commission has warned that it will not tolerate any slippage from the target and will if necessary demand tougher action from the government to ensure that it stays on course.

But it is far from clear that the Greek government can obtain the necessary support in parliament even for the present proposed measures, and so the uncertainty will continue.

It is therefore likely that there will be further falls in the euro over the coming weeks.

Sterling has improved slightly over the past month, helped by the weakness of the euro.

Shaw Capital Management News - The background situation in the UK remains unattractive, and there have already been threats that its AAA credit rating is at risk unless there are credible measures to reduce the massive fiscal deficit after the forthcoming general election is over.

Shaw Capital Management News - Foreign Exchange Markets 2010 Part 4: - The European Central Bank therefore faces a difficult situation. It continues to forecast “moderate” growth and “moderate” inflation; but it is being severely criticised for failing to address the problems of a two-speed economy, and for its unwillingness so far to face the threat that the deteriorating situation in Greece could quickly begin to destabilize other member countries and have serious consequences for the financial stability and growth prospects of the entire area.

But the UK is not constrained by membership of the European single currency system, and so there is no immediate risk of a default on its sovereign debts.

It has therefore been able to benefit from the problems affecting some other European countries.

Shaw Capital Management News - Foreign Exchange Markets 2010 Part 4: - The latest figures from the Office of National Statistics indicate that the UK just managed to move out of recession in the final quarter of last year. The estimate of growth of only 0.1% in the quarter was a considerable disappointment, and it is expected that it will be revised higher; but clearly the economy is not performing very well.

Government spending remains strong, and there was a surge in retail sales in the run-up to Christmas; but the anecdotal evidence suggests that consumers became much more cautious again in January.

The latest meeting of the Monetary Policy Committee of the Bank of England was concerned by the poor reaction so far to the dramatic measures that have been introduced to counter the recession, and reacted to this situation by leaving UK base rates unchanged once again at 0.5%.

Shaw Capital Management News - Foreign Exchange Markets 2010 Part 4: - It clearly has no intention of moving to an “exit strategy” until there is convincing evidence that a sustainable recovery in the economy is underway.

It did announce that purchases of market securities under the quantitative easing programme would now be discontinued after the £200 billion target has been reached; but its main priority is to continue to provide support for the fragile economic recovery.

Fiscal policy is also likely to remain unchanged until after the election, because the necessary measures to reduce the huge deficit will be unpopular, and might influence the outcome of that election.

Sterling is therefore receiving no real support from the domestic background situation, and in other circumstances might have been expected to move lower.

Shaw Capital Management News - Foreign Exchange Markets 2010 Part 4: - But the problems affecting the other major global currencies, and particularly the problems affecting the euro, have at least delayed any further falls. The yen has improved over the past month, despite a generally unfavourable domestic background situation, and some attempts by the Japanese authorities to prevent its appreciation against other currencies.

It has achieved an enhanced “safe haven” status in the current storm in the currency markets, and on the back of the relative success of its exports. But conditions in the Japanese economy remain very weak, and there has even been the threat of a downgrade of its credit rating unless measures are introduced to reduce its massive fiscal deficit.

However it does not appear that this threat will prevent the new Japanese government from introducing further measures to stimulate the economy, and urging the Bank of Japan to intervene in the markets to weaken the yen, and so its prospects remain very uncertain.