11 Aug 2015
USD/JPY could head towards 130.00 – Rabobank
FXStreet (Edinburgh) - Strategist at Rabobank Michael Every has aregued the chance that the yen could depreciate towards 130.00 and beyond vs. the US dollar.
Key Quotes
“The IMF also shares our view that “The BoJ needs to stand ready to ease further, provide stronger guidance to markets through enhanced communication, and put greater emphasis on achieving the 2% inflation target in a stable manner.”
“In other words, get ready for USD/JPY at 130 or 135 if 125 doesn’t do the trick. To be fair, the IMF underlines that without structural reforms Japan risks “...overreliance on yen depreciation to pursue domestic policy objectives...”, but to be equally fair, that has been blindingly obvious to all observers for a very long time now – and yet those structural reforms don’t seem to happen”.
“Of course, it will be all the harder now that PM Abe has spent so much political capital on pushing ahead with controversial political reforms far removed from the economic field”.
“Finally, one should also take note that the IMF warns of “...possible adverse spillovers” from overreliance on a weak JPY policy ahead. Might that be a hint towards the escalating currency wars we have already been talking about for some time? Better late than never for that recognition too if so!”.
Key Quotes
“The IMF also shares our view that “The BoJ needs to stand ready to ease further, provide stronger guidance to markets through enhanced communication, and put greater emphasis on achieving the 2% inflation target in a stable manner.”
“In other words, get ready for USD/JPY at 130 or 135 if 125 doesn’t do the trick. To be fair, the IMF underlines that without structural reforms Japan risks “...overreliance on yen depreciation to pursue domestic policy objectives...”, but to be equally fair, that has been blindingly obvious to all observers for a very long time now – and yet those structural reforms don’t seem to happen”.
“Of course, it will be all the harder now that PM Abe has spent so much political capital on pushing ahead with controversial political reforms far removed from the economic field”.
“Finally, one should also take note that the IMF warns of “...possible adverse spillovers” from overreliance on a weak JPY policy ahead. Might that be a hint towards the escalating currency wars we have already been talking about for some time? Better late than never for that recognition too if so!”.