Home USA News If Japan defends the Yen, Mobius says he will lose, strategist says he will relax if the Yen rises by 5

If Japan defends the Yen, Mobius says he will lose, strategist says he will relax if the Yen rises by 5

If Japan defends the Yen, Mobius says he will lose, strategist says he will relax if the Yen rises by 5

JapanStrategists at major brokerage firms believe the yen could weaken against the dollar if Japanese authorities decide to intervene in the currency market.exchange rateThe goal is to appreciate by 5 yen. Mark Mobius, the godfather of emerging markets, believes Japan’s official defense of the yen is fighting an unwinnable battle.

Last week, the yen hit its lowest price in nearly 34 years against the US dollar, and authorities intensified their message that speculation will not be tolerated. The yen exchange rate fell to 151.80 on Tuesday, falling below Japanese authorities’ price intervention level in 2022 meant to prevent the yen from depreciating for the first time since 1998.

In an interview with Bloomberg Television, Mobius said he expected the yen to weaken further and that those who had short yen could make money. “The Bank of Japan is now considering a different approach, but it remains to be seen whether they really have the confidence to make a surprise change in policy,” he said.

Yujiro Goto, head of Japan foreign exchange strategy at Nomura Securities, said: “If authorities use trillions of yen to intervene as they did in 2022, it could lead to a 4-5 yen rise in the yen against the dollar.” Is.”

Japanese Finance Minister Shuni Suzuki said last week he would not rule out “taking bold steps to prevent excessive exchange rate fluctuations.” However, given that the yen is under pressure due to the huge interest rate differential between US and Japanese bonds, the market can’t help but be quite skeptical about whether intervention can keep the yen strong in the long term .

Japan’s foreign exchange reserves stood at US$1.15 trillion at the end of February. Goldman Sachs estimates that the amount available for intervention without selling long-term securities is about $175 billion.

Japan’s Finance Ministry will spend a total of 9 trillion yen (US$59 billion) in three works in September 2022 and October 2022. At the time of the first intervention, the yen-dollar exchange rate rose by more than 5 yen from an intraday low to an intraday high of 140.36.

Kenta Tada, chief currency strategist at Daiwa Securities, said: “Depending on the supply and demand situation of the yen, the scale of intervention of 1 trillion yen could push the yen against the dollar by a little less than 1 yen,” “They could We can hope to see at least an appreciation of 5 yen.” Yen.”

Bank of America strategists Shuhio Yamada and Meghan Swiber wrote in a note last month that if the dollar rose to the 152-155 yen range, or one-month implied volatility would rise to more than 10% from about 8% currently. If so, Japan’s risk increases. Interference in the currency market will increase.

Additionally, the yen’s depreciation has also impacted retail investors.investImpact of human capital outflow. Due to the introduction of the new Japanese Individual Savings Account (NISA) in Japan, Japan’s purchases of foreign shares through investment trusts exceeded 1 trillion yen in the first two months of this year.

From a broader perspective, Japanese investors and companies are investing more cash in high-return overseas projects. Bloomberg analyzed Japan’s balance of payments data and found that over six months, Japan’s core balance of funds, a broad indicator of capital flows, had a deficit of 2.2 trillion yen.