© Kohei Iwahara
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Certainly, the mentioned measures are not going to be enough to set the Japanese economy on the growth path. Also, talks about introducing foreign workers to Japan have been rising for many and many years for now and it is a really gradual process, which does have a positive impact. Also, that concerns the national universities with the implementation of dual measures for the students – some of it would work and some of it would just not. Henceforth, to sum up, it would be worth saying that it could take a decade to see some serious impact on the nation's economy.
The BoJ is struggling to reach its target inflation of 2%, however, it does not seem that it is willing to further expand its monetary policy. The speculation rises and Morgan Stanley Securities Co. predicts that officials will cut back on stimulus in 2016, with Nomura Holdings Inc. and Credit Suisse AG seeing it in the first half of the year. What is your thought on the matter?
At the current moment our main scenario for the BoJ to implement another round of measures is the October 3rd meeting this year. One of the main reasons behind this is the fiscal stimulus that the officials are going to initiate, which is going to weaken the Yen towards the end of 2015. Obviously, Japan does have a lack of stimulus in the economy and possibly a fall in oil prices, so we anticipate the bank to continue hiking further towards the end of 2015.
What will be the major headwinds for the Yen and what are your forecasts for USD/JPY in Q3 this year?
Talking about the factors that could impact the Yen, we believe that postponing the Fed rate hike would become a headwind; also the possible outcome of the Greek crisis could trigger some risk aversions of the currency. As concerns the USD/JPY currency pair, we see it trading at 125 levels in the third quarter and 127 in Q4.