The focus of stock trading has switched to deliveries for the coming month, and inves- tors are turning their attention to what the next fiscal year may have in store.

Market participants are turning bullish on signs that the economy is near to following a sustainable growth pattern led by domestic demand.

Upward revisions of corporate earnings are also helping to bolster investor confidence.

There appears a good chance that the benchmark Nikkei average will test 22,666.8 this summer, the mark it hit June 26, 1996.

Foreign investors are banking on a strong yen, and they may be expecting the Bank of Japan to change its monetary policy in favor of raising the key short-term interest rate, which has been effectively maintained at zero.

From a long-term perspective, however, the yen's topside may be capped by occasional sales stemming from doubts about the nation's fiscal health.

I personally expect the midterm dollar-yen rate to move between 100 yen and 120 yen.

It appears unlikely the nation's self-sustained economic growth, or a continued rise in government tax revenues, will outpace an increase in the long-term interest rate, which matches interest payments on long-term government debts.

If the long-term interest rate rises faster than economic growth, the central and local governments will be kept busy with interest servicing, leaving the principal of their loans little changed.

The outstanding balance of their long-term borrowing at the end of fiscal 2000 is estimated at 645 trillion yen.

The prospect of the government being unable to put its financial house in order will weigh heavily on the yen as well as Japanese stock prices.

The U.S. policy mix of credit-tightening and increased fiscal spending, on the other hand, should help shore up the dollar in relation to the yen, and a weak yen could entice foreign investors to unwind their Japanese portfolios.

With fears of higher U.S. interest rates gone, New York share prices appear likely to rebound in the coming month, bolstered by optimism about corporate earnings and economic prospects.

The Dow Jones average will find itself in a near-term range between 9,000 and 12,000.