19 Feb 2016
USD/JPY: Yen repatriation flows will not be dominant factor - Nomura
Nomura's Global FX Strategy Team notes that the share of Yen repatriation in total foreign income has been gradually declining, suggesting Japanese corporates’ appetite for repatriation is not necessarily strong, which suggests repatriation flows will not be the dominant factor for USD/JPY.
Key Quotes
"Japanese corporates tend to repatriate profits earned from their foreign operations in March, before the fiscal year-end."
"As the JPY’s appreciation has accelerated recently, this trend attracts strong market interest. In fact, on average 24% of total annual repatriation by Japanese corporates occurs in March, based on BoP data."
"While small acceleration of repatriation by Japanese corporates is likely in March, nonetheless, as we argued last year, March’s seasonality of USD/JPY has been unclear and we do not expect repatriation flows to be the dominant factor for USD/JPY."
"We do not view March’s repatriation to be a big downside risk for USD/JPY, while FX movements in March would be more important in the medium term for Japanese investors and corporates’ behaviour into the new fiscal year."
Key Quotes
"Japanese corporates tend to repatriate profits earned from their foreign operations in March, before the fiscal year-end."
"As the JPY’s appreciation has accelerated recently, this trend attracts strong market interest. In fact, on average 24% of total annual repatriation by Japanese corporates occurs in March, based on BoP data."
"While small acceleration of repatriation by Japanese corporates is likely in March, nonetheless, as we argued last year, March’s seasonality of USD/JPY has been unclear and we do not expect repatriation flows to be the dominant factor for USD/JPY."
"We do not view March’s repatriation to be a big downside risk for USD/JPY, while FX movements in March would be more important in the medium term for Japanese investors and corporates’ behaviour into the new fiscal year."