JPY by RGE Monitor

Outlook

• DB: Given heightened global risk
  aversion, the plunge in global asset prices and a reduced interest-rate
  disadvantage between major economies and Japan, the JPY may trade
  sideways or even appreciate further over the short-to-medium term
  against the USD and EUR even after its recent rally
• Eisuke
  Sakakibara, formerly Japan's top currency official (via Bloomberg):
  Strong yen is in Japan's national interest, particularly in this
  situation when raw material prices will increase; JPY may rise to 80
  per USD as so-called carry trades unwind
• Lex: Mood music for
  yen remains good, with currency still undervalued in real
  trade-weighted terms. Global investors continue to unwind yen-funded
  carry trades. Japanese retail investors are switching back into yen
  owing to burnt fingers; but questions over continuing strengthening
  remain since Japan is teetering on the brink of recession and its banks
  are exposed to tanking stock market and mushrooming bankruptcies
• Jen:
  While USD/JPY can spike lower in times of extreme risk aversion, it
  cannot stay below 100 for long due to Japan's declining financial home
  bias; 110 for USD/JPY makes more sense than 90 over the medium-term
• MUFJ:
  JPY/USD may fall below 100 in event of a dollar crisis, but won't stay
  there in the long-term due to 1) economic decline from demographic
  shift, 2) large interest rate gap, 3) yen failing to become key reserve
  currency, 4) declining home bias of baby boomers

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