© Masafumi Yamamoto
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With the current uncertainties in Europe, why there is no significant appreciation of the Yen, as safe haven currency, against the US Dollar?
I think currently Japan's economy is not stable; therefore there is no reason to buy the Yen for the time being. However, at the moment the investors are seeking for liquidity, thus they prefer currencies and financial markets, which are able to provide the demanded liquidity, and Japan is definitely one of them. For those who want to avoid the US Dollar or the Euro risk, the best choice might be the Pound Sterling and the Japanese Yen. In that sense some people may perceive the Yen as safe haven. During the risk-aversion period the Yen usually outperforms the other currencies. That kind of track record is attracting the investors.
If Greece eventually exits the Eurozone, how will it affect the Yen?
Following any breaking news coming from the Euro bloc, the Yen may appreciate quite significantly. Probably those who are seeking to avoid a risk, associated with Greek exit from the Euro area, they may have to shift to other currencies like the British Pound, the US Dollar and the Japanese Yen. Out of these three currencies, I would say the Yen is least attractive as safe haven.
Do you expect BOJ to add stimulus next week?
I do not expect that the BOJ would agree on the additional stimulus this time. The BOJ decided on the easing measures in February and April. The central bank's officials are determined to extend the period of asset purchases to June next year. So far I do not see any strong reason to undertake any measures within a month. However, for the next three month period I am not sure. If the current tension in the market or downside pressure in the Euro area and China to continue, and Nikkei, the Japanese equity index, keeps falling, I think the BOJ may decide on the additional easing to contain the risks. I believe the asset purchasing programme is on the table, but it is not necessarily the main topic of next meeting agenda.
What is your forecast for the USD/JPY for the end of Q2 and for the end of this year?
For the end of June we forecast USD/JPY to trade at 82, while at the end of Q3 we assume the pair will ap-preciate to 85. By the year end we expect the US Dollar to continue strengthening, climbing to 88 against the Yen.