Yen hasn’t been the haven we know and love

Genevieve Signoret & Alejandro Carrión

Currencies

Scroll down to look at the third and last graph underneath our text. We’re surprised at how stable the USD/YEN rate held during last week’s volatility. Some analysts view the yen to be losing its safe-haven status. We think it’s temporary and that its responds to the market expectation—one we share—that, in the next 18 months, as the Fed gradually normalizes its monetary policy stance, the Bank of Japan will be adding ever more abnormal stimulus (up its asset purchase program).

We update our foreign exchange forecast table to incorporate June 30 (Q2) closing rates:

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Data compendium

The peso closed against the dollar today at $1.00=MXN15.70. We expect it to rebound Monday if Greece votes “Yes”. Our forecast for end 2015 is 14.70.

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We see the euro trending down against the dollar for 18 months to come, all the way to parity.

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The USD/YEN held remarkably firm during last week’s crisis in Greece. Some say the yen is losing its safe-haven status. We say it’s temporary.

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