6 Apr 2015
Abenomics likely to encourage future reshoring – Nomura
FXStreet (Barcelona) - Research Analysts at Nomura, explains that the weakening Yen has benefitted the relative appeal of producing in Japan, and that Abenomics will likely encourage future reshoring.
Key Quotes
“We think reshoring will continue as a result of Abenomics. USD/JPY, which affects the relative profitability of overseas and Japanese production bases, is currently around 120, and the weaker yen has continued to ensure a recovery in earnings at Japanese companies and to enhance the relative appeal of producing in Japan.”
“Elsewhere, the US Fed has ended QE3 and is looking to hike rates. Given weak immediate prospects for core inflation minus energy and foodstuffs, we think the Fed will not start to hike interest rates until September. However, when it does, this will probably exert upward pressure on the dollar versus the yen by exacerbating the spread between US and Japanese interest rates.”
“Other Abenomics-related factors apart from yen depreciation are also likely to encourage reshoring, including cuts in the rate of corporation tax and progress with economic partnership agreement negotiations.”
Key Quotes
“We think reshoring will continue as a result of Abenomics. USD/JPY, which affects the relative profitability of overseas and Japanese production bases, is currently around 120, and the weaker yen has continued to ensure a recovery in earnings at Japanese companies and to enhance the relative appeal of producing in Japan.”
“Elsewhere, the US Fed has ended QE3 and is looking to hike rates. Given weak immediate prospects for core inflation minus energy and foodstuffs, we think the Fed will not start to hike interest rates until September. However, when it does, this will probably exert upward pressure on the dollar versus the yen by exacerbating the spread between US and Japanese interest rates.”
“Other Abenomics-related factors apart from yen depreciation are also likely to encourage reshoring, including cuts in the rate of corporation tax and progress with economic partnership agreement negotiations.”