Despite the rollicking Euro vs. Yen movement, Dr Eisuke Sakakibara was quoted today by Bloomberg as saying that the chance of a year-end BoJ rate hike remains less than 50% (30% to 40% was his more precise prognostication). And, if so, it would hardly count a turning of the proverbial screw at a mere 0.25%. Modulating the use of Yen for all manner of ex-Japan, ex-Yen finance seems not to be an objective of the MoF, the BoJ, or, for that matter, anyone else in the world who matters.
It's ironic that everyone sees the Yen lower v. the dollar in 2007, lost of people are bearish on the dollar now, yet almost no one seems willing to say "Yes, it's now Go Long Yen!!". It this because everyone has become a is a momentum or feedback trader? Are there no more contrarians left in the world? Whatever the case, it is a situation that suits TeamJapan just fine.
Given the recent reluctance for rate hikes I don't see Sakakibara's prediction of less than 50/50 meaning much. I mean, _I_ could tell Bloomberg the same thing, though I don't have a cool name like Mr. Yen. Not to drift off the topic too far but when was the last time Sakakibara got anything right? Here's what he told Bloomberg on Feb. 17, 2005 (when the dollar was at 105):
ReplyDeleteThis year's decline in the yen ``is over,'' Sakakibara said in an interview yesterday in Tokyo. The economy can cope with a stronger currency, and the yen may gain to 90 per dollar before the Ministry of Finance takes action to stop it, he said.
``Breaking 100 is just a natural market move, which authorities should let happen,'' said Sakakibara, who directed Japan's foreign-exchange policy from 1997 to 1999 at the Ministry of Finance.
Of course, it was soon after that the dollar was getting around 120 yen.
CJ (this is a funky system. I tried to log in)
Short USD/Long JPY is a pretty expensive trade to finance. You have to have the ability to take a helluva lot of pain on a daily basis in anticipation of that big move in your direction. V easy to bleed to death first. A few have.
ReplyDeleteAnon...I concur. this is precisely why the BoJ is one of the Prime Enablers, and need not intervene directly a-la Mr Yen's Mid-90s pecadillo/.
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