Yen Gaining Strength – BBH
Research Team at BBH, suggests that part of the yen's strength reflects
the weakness of the US dollar but another part of it looks independent
of US developments.
Key Quotes
“Although
many economists and observers try tying the yen's strength to its
alleged role as a safe haven, we think it is misunderstood. Among the
riskiest assets, emerging market equities, or high yielding bonds, or
commodities, have been rallying.
There is no compelling sign of
panic, heightened anxiety, or need for a safe haven. In addition,
there is scant evidence that investors are flocking to Japanese assets.
Through mid-March, foreigners were net sellers of Japanese equities.
It is true they have turned net buyers in April, though the amounts are
modest (JPY1.7 trillion or ~$15 bln over the past four weeks, after
being net sellers over the previous 13 weeks selling roughly $36.8 bln
of Japanese shares).
Foreigners have been steady buyers of
Japanese bonds this year, except a few weeks in March. It is a
noteworthy development that has received very little attention. Who are
buying negative yielding Japanese government bonds besides the BOJ?
Foreign investors.”
