Author: Anya Andrianova
Article: Original Article
Publication date: Wednesday, December 21, 2022
Sudden adjustment in BOJ’s policy increases the pressure on international investors to hedge their foreign assets, and this may reinforce the growth of the yen, according to Societe Generale SA.
The currency which on Tuesday, at some point had spiked by almost 5% and reached 130.58 against the US dollar, recorded the biggest daily growth in this century. Despite this, the yen may strengthen to 125 per dollar in January as the Japanese money managers adapt to the hawkish position of the bank, said Kit Juckes, SocGen’s chief foreign-exchange strategist.
“Earlier, we said that big USD/JPY swings are largely dependent on Japanese net international investment position”, he wrote. “This step increases the pressure on the hedging of foreign asset portfolios and therefore on purchase of yen in the holiday markets.”
Forecast: decrease of USD/JPY