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26 Feb 2015
JPY to depreciate even if BoJ keeps policy steady – BTMU
FXStreet (Barcelona) - Takahiro Sekido, Strategist at Bank of Tokyo-Mitsubishi UFJ, expects BoJ to maintain its monetary policy steady at least until autumn 2015, and further forecasts USD/JPY to reach 123 by end-2015.
Key Quotes
“Over the next few months, market expectations for further monetary easing may push USD/JPY higher. However, the BoJ is unlikely to loosen monetary policy more at least until autumn 2015.”
“Even despite the BoJ’s steady monetary policy, we maintain our view for a moderate JPY depreciation against USD. We think three factors will drive a weakening: 1) foreign direct investment outflows; 2) securities investment flows; and 3) the trade deficit. Japan made JPY12.6 trillion in foreign direct investments in 2014.”
“The market expects USD/JPY to rise, reflected in USDJPY risk reversals. Around end-2014, most market participants were enthusiastic about USD/JPY rising to ¥130 or ¥140. However, USD/JPY so far in 2015 has not toed our USD/JPY line. We maintain our view of USD/JPY at around ¥123 toward the end of 2015.”
Key Quotes
“Over the next few months, market expectations for further monetary easing may push USD/JPY higher. However, the BoJ is unlikely to loosen monetary policy more at least until autumn 2015.”
“Even despite the BoJ’s steady monetary policy, we maintain our view for a moderate JPY depreciation against USD. We think three factors will drive a weakening: 1) foreign direct investment outflows; 2) securities investment flows; and 3) the trade deficit. Japan made JPY12.6 trillion in foreign direct investments in 2014.”
“The market expects USD/JPY to rise, reflected in USDJPY risk reversals. Around end-2014, most market participants were enthusiastic about USD/JPY rising to ¥130 or ¥140. However, USD/JPY so far in 2015 has not toed our USD/JPY line. We maintain our view of USD/JPY at around ¥123 toward the end of 2015.”