Is a stronger dollar/yen sustainable? |
| FinanceAsia - Jun 23, 2008 |
JPMorgan’s foreign exchange strategist Tohru Sasaki warns that the Japanese yen is still far from a normal currency, and that forecasts for its movements can often be counter-intuitive.
Two of the most important features of the yen currently are a decline in the carry trade and a more bearish outlook for the Japanese economy. Both tend to strengthen the yen, as Japanese investors unwind their short yen positions in the first case, and Japanese foreign direct investment retrenches in the face of higher risk in the second case.
Even the high probability of rate hikes in the US later this year will not necessarily drive the yen lower – in the past, the dollar has risen against the yen ahead of the rate rises, only to level out or decline subsequently. advertisement
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- Posted: 2008-06-23 21:27:57
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