Wells Fargo - JPY – Reports Of The Yen’s Demise Are Greatly Exaggerated

Wells Fargo - "The yen has fallen dramatically since the start of the fourth quarter as the Bank of Japan has eased its monetary policy stance and the new Japanese Prime Minister has called for even more aggressive action. While economic fundamentals are undoubtedly negative for the yen, our sense is that the yen’s recent decline has been too far and too fast. The Japanese currency’s fall has potentially overshot some important interest rate fundamentals, while speculative yen short positions are already very large. With the next round of U.S. budget talks not far away, we see potential for corrective yen strength during the first quarter, and only a gradual yen slide thereafter. We see USD/JPY at JPY85.00 in three months, and at JPY88.00 around the end of this year. While our general bias is to hedge yen receivables or look for yen selling opportunities, we would await more favorable levels before initiating such transactions."

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Tags: JPY, Japanese Yen, Wells Fargo, yen

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