nalumalblws
01-02-2023 23:54,
If you have a look at the sterling, although the Bank of England said in its minutes that an interest rate rise would not be coming shortly, but the return on the sterling is still 5.25% when compared with the yen that's 0.25 percent, the swap with this pair is nevertheless high. Promoting it for it's current level would just signal a fantastic bargain for carry traders.
Comments made by G7 has been that the yen is too low, yet this issue has been there since god knows when. Rumors and comments are just that, unless strong activities and measures are taken, they're unfounded. The yen can go down furthur, but how much lower can they get? A fantastic bargain would stay a fantastic bargain and a greater bargain could be when the yen pairs move even lower. If you remember, the sterling/yen pairs nevertheless remained on it's upside path regardless of the raise of 0.25% by the BOJ!
If I'm a massive hedge fund, I would be thrilled to see the pairs go even lower, since I could buy them at reduced prices, comments made by Suda and the G7 has ever been there, and the number of times were action taken? NONE.
My personal opinion on this is that, the comments were just comments, a greater yen would not benefit Japan, and although the European nations and the US stand to profit,they will not take sufficient action to avoid the return difference. This bearish talk would soon be forgotten and the yen pairs would resume on their bullish paths once again.
The markets memory is brief, rather similar to my grandmother's, how often have the yen been too low, and the number of times were the calls for a stronger yen been ignored?
Carry traders could see the cheap carry pairs and pounce on it again to benefit not just from the exchange, but because of its potential capital gains too.
Let us say that the BOJ raises interest rate, the maximum that they will increase would be 0.25%, which still would mean 1 thing, cheap funding. Not just the sterling yen pair, but also the NZD yen and aussie yen pair, the swap on these 2 pairs would be 7% and 6% respectively. A rise of yen interest rates could result in a 6.75% return for NZD and 5.75% for aus, and it is still a very good source for swaps.
Once the fever of yen selling finishes, I anticipate the yen pairs to bounce back up.
That is my private view and of course, I may be wrong so I'm placing this up for discussion.
Comments made by G7 has been that the yen is too low, yet this issue has been there since god knows when. Rumors and comments are just that, unless strong activities and measures are taken, they're unfounded. The yen can go down furthur, but how much lower can they get? A fantastic bargain would stay a fantastic bargain and a greater bargain could be when the yen pairs move even lower. If you remember, the sterling/yen pairs nevertheless remained on it's upside path regardless of the raise of 0.25% by the BOJ!
If I'm a massive hedge fund, I would be thrilled to see the pairs go even lower, since I could buy them at reduced prices, comments made by Suda and the G7 has ever been there, and the number of times were action taken? NONE.
My personal opinion on this is that, the comments were just comments, a greater yen would not benefit Japan, and although the European nations and the US stand to profit,they will not take sufficient action to avoid the return difference. This bearish talk would soon be forgotten and the yen pairs would resume on their bullish paths once again.
The markets memory is brief, rather similar to my grandmother's, how often have the yen been too low, and the number of times were the calls for a stronger yen been ignored?
Carry traders could see the cheap carry pairs and pounce on it again to benefit not just from the exchange, but because of its potential capital gains too.
Let us say that the BOJ raises interest rate, the maximum that they will increase would be 0.25%, which still would mean 1 thing, cheap funding. Not just the sterling yen pair, but also the NZD yen and aussie yen pair, the swap on these 2 pairs would be 7% and 6% respectively. A rise of yen interest rates could result in a 6.75% return for NZD and 5.75% for aus, and it is still a very good source for swaps.
Once the fever of yen selling finishes, I anticipate the yen pairs to bounce back up.
That is my private view and of course, I may be wrong so I'm placing this up for discussion.