29 Jan 2014
Flash: Yen remains obvious funding currency of choice - BTMU
FXstreet.com (Barcelona) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ notes that the BOJ remains the most aggressive central bank globally in easing its monetary stance and the yen remains the obvious funding currency of choice.
Key Quotes
"Balance of Payments data indicate a notable upturn in short-term yen loans abroad which served as a good proxy of interest in yen carry positions prior to the financial crisis."
"The 12-month average in November for yen loans abroad totalled JPY 1.23trn. In addition to yen carry interest, if equity markets were to rebound further, Japanese households may well be enticed by the latest more attractive level of yield in countries like Turkey and Brazil that have been popular destinations for funds through Japanese investment trusts. Investments in bonds in Turkey and Brazil make up 78% and 75% of totals respectively."
"Of course risk appetite will be dependent on conditions in Japan as well and the growth outlook remains favourable. Today the MOF raised its assessment for the overall economy for the fourth consecutive quarter – the longest run since 2004."
Key Quotes
"Balance of Payments data indicate a notable upturn in short-term yen loans abroad which served as a good proxy of interest in yen carry positions prior to the financial crisis."
"The 12-month average in November for yen loans abroad totalled JPY 1.23trn. In addition to yen carry interest, if equity markets were to rebound further, Japanese households may well be enticed by the latest more attractive level of yield in countries like Turkey and Brazil that have been popular destinations for funds through Japanese investment trusts. Investments in bonds in Turkey and Brazil make up 78% and 75% of totals respectively."
"Of course risk appetite will be dependent on conditions in Japan as well and the growth outlook remains favourable. Today the MOF raised its assessment for the overall economy for the fourth consecutive quarter – the longest run since 2004."