Download Japanese yen

Helaba Research
FX FOCUS
21 August 2014
Japanese yen
AUTHOR
Christian Apelt, CFA
phone: +49 69/91 32-47 26
[email protected]
EDITOR:
Markus Reinwand, CFA


PUBLISHER:
Dr. Gertrud R. Traud
Chief Economist/
Head of Research
Helaba
Landesbank
Hessen-Thüringen
MAIN TOWER
Neue Mainzer Str. 52-58
60311 Frankfurt am Main
phone: +49 69/91 32-20 24
fax: +49 69/91 32-22 44

The US dollar was able to appreciate most recently, similar to the Norwegian krone. Among
the emerging markets the Eastern European currencies lost ground, while the Asian
currencies gained.
The Japanese yen recovered somewhat this year from the massive losses in 2013. And it
did this even though the economic situation in Japan worsened, and doubts about the
effectiveness of the “Abenomics” are growing. While the global environment has tended to
support the yen in recent months, the approaching interest rate turnaround in the US should
weigh on the yen against the US dollar. Vis-à-vis the euro, however, the yen could continue
to recover.
Helaba Currency Forecast
Euro performance on a month-over-month basis
% vs. euro compared to the previous month (from 07/22 to 08/20/14)
US dollar
1,6
Japanese yen
-0,7
British pound
-1,2
Swiss franc
0,3
Canadian dollar
-0,6
Australian dollar
0,4
New Zealand dollar
-1,9
Swedish krona
0,6
Norwegian krone
1,5
Czech koruna
-1,5
Polish zloty
-1,2
This publication was very
carefully researched and
prepared.
However,
it
contains
analyses
and
forecasts regarding current
and future market conditions
that are for informational
purposes only. The data is
based on sources that we
consider reliable, though we
cannot
assume
any
responsibility for the sources
being accurate, complete,
and
up-to-date.
All
statements in this publication
are
for
informational
purposes. They must not be
taken as an offer or
recommendation
for
investment decisions.
Hungarian forint
-2,1
Russian ruble
-2,4
Turkish new lira
-2,1
South Korean won
1,9
2,4
0,9
0,0
Chinese yuan
Indian rupee
South African rand
Brazilian real
-0,7
0,1
Mexican peso
■ Core currencies ■ Rest of G10 ■ Currencies of emerging markets
Sources: Bloomberg, Helaba Research
HELABA RESEARCH · 21 AUGUST 2014· © HELABA
1
FX FOCUS JAPANESE YEN
JPY: currency arrows misses its mark
Last year the Japanese yen still stood in the spotlight of the currency market. At that time, the
currency was among the weakest in the world. But in 2014, the yen – defying the general
expectations – was able to make up some ground again. The recovery is based mostly on
technical arguments rather than on a positive fundamental trend in Japan. However, its status as a
safe investment haven has so far not helped the yen very much. A depreciation of the currency is
considered an essential element of so-called “Abenomics,” the economic policy of Prime Minister
Abe who was voted into office at the end of 2012. In the wake of the weaker yen, stock prices rose
and the economic data in Japan improved. In 2014, all of these trends stalled. Has “Abenomics”
failed?
Politically engineered yen
devaluation in 2013
In 2013, Japan’s central bank raised its inflation target to 2 %. To achieve it, the Bank of Japan
decided on a massive expansion of its asset purchase program. In addition to a reduction in
interest rates, the goal – even if not officially declared – was a devaluation of the yen. This
happened last year with losses of 17 % against the US dollar and more than 20 % against the
euro. The extent possibly surprised even the central bankers. During the global financial crisis and
the European debt crisis, the yen appreciated robustly and was considered, all in all, overvalued in
the fall of 2012.
Yen-weakness caused by monetary policy flagging
Ratio
* Assumption: Fed ends purchase program in 11/2014, BoJ continues purchases
Sources: Macrobond, Helaba Research
“Abenomics“ with
initial successes
Higher VAT and import prices boosted inflation
JPY
% year-on-year
% year-on-year
Sources: Macrobond, Helaba Research
In addition to the expansionary monetary policy, “Abenomics” is based on government spending
programs to stimulate the economy, and these were put into practice. Structural reforms are
planned as the so-called third arrow of this policy. The mood in the economy improved noticeably
thanks to these measures, and growth started up already at the beginning of 2013. With the
devaluation of the yen, corporate profits ballooned and the Japanese stock market was booming.
Even the inflation rate rose, as intended: while prices in Japan were still declining at the beginning
of 2013 compared to the previous year (as so often in recent years), inflation already hit 1.6 % at
the end of 2013. The devaluation of the currency had a direct effect on inflation, since the price of
imports grew by around 18 %. In addition, following the shutdown of all nuclear power plants,
Japan is more strongly dependent on the import of energy products, which are usually settled in
US dollars. At first glance, “Abenomics” seemed to be turning into a success.
To refinance the higher state spending in 2013 and to reduce the high budget deficit of around 9 %
of GDP, the VAT was raised in Japan at the beginning of April from 5 to 8 %. As a result, inflation
jumped to as high as 3.7 %. In the run-up to the tax hike, private consumption grew robustly, as
expected. But the slump that followed was more pronounced than the preceding increase. In
addition, corporate investments weakened – with the upshot that GDP recorded an annualized
contraction of 6.8 % in the second quarter, the largest decline following the tsunami of 2011. But at
least signs are pointing to an improvement in the second half of the year. Sentiment indicators
HELABA RESEARCH · 21 AUGUST 2014· © HELABA
2
FX FOCUS JAPANESE YEN
have recovered from the brief slump, and the first real data is also signalling a return to growth.
With that, GDP should expand by a meagre 1 % in 2014, and the prospects are similar for the
coming year. The economic effects of “Abenomics” are thus rather sober.
Only brief growth boost from “Abenomics”
Continuing trade deficit in spite of weaker yen
% year-on-year, previous quarter
% of GDP
Sources: Macrobond, Helaba Research
Sources: Macrobond, Helaba Research
Foreign trade barely
benefits from yen
depreciation
Even the depreciation of the yen gave few impulses to export. To be sure, exports rose nominally
by around 10 % in 2013, largely because the trade invoiced in US dollar was higher when
converted to yen. But real exports actually declined slightly. And since imports actually posted real
growth because of higher demand for energy products, Japan’s trade deficit expanded. Even the
once-proud current account surplus briefly turned negative. Shrinking energy imports suggest that
the trade balances will improve again somewhat in 2014. Should the first nuclear power plants in
fact be brought back on line in 2015, this trend will continue also in the coming year.
So far the structural reforms have not been very convincing. For example, changes are being
sought to corporate taxes and to the investment guidelines for public pension funds. The
negotiations about a trans-Pacific free trade agreement are dragging on. Higher wage growth as a
way of fighting deflation is not something the government can simply order, even if the collective
wage agreements recently negotiated have shown above-average gains. While wages rose a little
nominally most recently, adjusted for inflation they declined – in spite of a low unemployment rate –
as markedly as rarely ever before. The higher inflation is based largely on the VAT hike and higher
import prices. Both effects should weaken into the coming year, with the result that inflation will
then approach the zero mark again, until the next step in the VAT hike to 10 % follows in October
2015. A sustained inflationary process in Japan is thus not on the horizon. Japan’s fiscal problems
– the national debt amounts to more than 240 % of GDP – remain unsolved.
Lower US yields only a temporary yen support
JPY
Sources: Macrobond, Helaba Research
HELABA RESEARCH · 21 AUGUST 2014· © HELABA
Yen even with yield advantage against the euro
% points
JPY
% points
Sources: Macrobond, Helaba Research
3
FX FOCUS JAPANESE YEN
Yen depreciation
against US dollar
The Bank of Japan will continue its asset purchase program for the time being. In fact, given the
economic setback and an inflation that will decline again in the near future, a slight expansion of
that program is not unlikely. Since the US central bank will soon let is purchases expire, the
quantitative monetary policy argues once again for a weaker yen. Globally declining capital market
returns traditionally support the low interest-rate currency from Japan. In fact, the interest rate
spreads currently signal even a stronger yen against the US dollar and especially against the euro.
But at least in the US, the Treasury yields should rise again with a view toward the interest rate
turnaround in 2015, with the result that the dollar-yen exchange rate will likely rise again from its
current level of 104. But since the yen, following its devaluation last year, should by now be seen
as rather favourable on the basis of adjusted purchase power parities or real exchange rate
indexes, its potential for losses is constrained. Thus, the dollar-yen rate should rise to 105 by the
end of the year and a little beyond that in 2015. By contrast, the yen could advance against the
euro, since the ECB will probably implement the more extreme monetary policy. On longer
maturities, Japanese sovereign bonds are by now even yielding more than German bonds. The
euro-yen exchange rate will presumably from its current level of 138 to below 130 in the first half of
2015. Major growth impulses for the Japanese economy should thus not be expected from this
side. For that, Prime Minister Abe has to come up with something more than printing money.
Helaba Currency Forecasts
Performance
year to date 1 month
vs. Euro
current*
Forecast horizon at end ...
Q3/2014
Q4/2014
Q1/2015
Q2/2015
(vs. Euro, %)
US dollar
3,7
1,6
Japanese yen
5,2
-0,7
138
133
131
126
128
British pound
3,9
-1,2
0,80
0,80
0,79
0,78
0,78
Swiss franc
1,3
0,3
1,21
1,25
1,25
1,25
1,25
Canadian dollar
0,4
-0,6
1,45
1,42
1,38
1,33
1,32
Australian dollar
7,9
0,4
1,43
1,44
1,42
1,36
1,36
New Zealand dollar
5,7
-1,9
1,58
1,55
1,52
1,50
1,54
Swedish krona
-3,5
0,6
9,17
9,20
9,00
8,80
8,70
Norwegian krone
1,6
1,5
8,21
8,10
7,90
7,80
7,70
vs. US-Dollar
1,33
1,30
1,25
1,20
1,20
(vs. USD, %)
Japanese yen
1,5
-2,2
104
102
105
105
107
Swiss franc
-2,2
-1,2
0,91
0,96
1,00
1,04
1,04
Canadian dollar
-3,2
-2,1
1,10
1,09
1,10
1,11
1,10
Swedish krona
-6,9
-1,0
6,92
7,08
7,20
7,33
7,25
Norwegian krone
-2,0
-0,1
6,20 1,57
6,23
6,32
6,50
6,42
US-Dollar vs. …
(vs. USD, %)
British pound
0,2
-2,8
1,66
1,63
1,58
1,54
1,54
Australian dollar
4,1
-1,1
0,93
0,90
0,88
0,88
0,88
New Zealand dollar
1,9
-3,4
0,84
0,84
0,82
0,80
0,78
*20.08.2014
Sources: Bloomberg, Helaba Research 
HELABA RESEARCH · 21 AUGUST 2014· © HELABA
4
Darstellung möglicher Interessenkonflikte bei der Weitergabe von
Anlageempfehlungen („Finanzanalysen“) gem. § 34b WpHG und MAR
Diese Publikation wurde weitergeleitet von der Landesbank Hessen-Thüringen.
Dieses Institut unterliegt der Aufsicht der Europäischen Zentralbank und der
Bundesanstalt für Finanzdienstleistungsaufsicht.
Diese Publikation wurde erstmals am 21.08.2014
um 14:07
Uhr weitergegeben.
Sie gibt die von dritten erstellten Anlageempfehlungen inhaltlich unverändert weiter.
Die Helaba hat vor deren Weitergabe durch den Ersteller keinen Zugang zu diesen
Publikationen.
Bezogen auf Finanzinstrumente oder Emittenten, die direkt oder indirekt Gegenstand
der jeweils weitergegebenen Anlageempfehlung sind, können folgende
Interessenkonflikte der Helaba bzw. eines mit ihr verbundenen Unternehmens
auftreten:
Landesbank
Hessen-Thüringen
Girozentrale
1. Die Helaba und mit ihr verbundene Unternehmen betreuen an einem Markt
Finanzinstrumente, die selbst oder deren Emittenten Gegenstand der
Anlageempfehlung sind, durch das Einstellen von Kauf- oder Verkaufsaufträgen.
Hausadresse
Friedrichstraße 74
40217 Düsseldorf
Betroffene Werte:
B+S Banksysteme AG
Postadresse
Postfach 10 28 23
40019 Düsseldorf
Villeroy & Boch AG
Telefon
02 11 / 82 6 - 05
Telefax
02 11 / 82 6 - 31 84
2. Die Helaba und mit ihr verbundene Unternehmen haben einen Handelsbestand in
Aktien der folgenden Gesellschaft:
Internet
www.helaba.de
Betroffene Werte:
Bankleitzahl
300 500 00
Sanofi S.A.
SWIFT-Adresse
WELA DE DD
Uniper SE
UST.-Id.-Nr.
DE 114 104 159
3. Die Helaba und mit ihr verbundene Unternehmen handeln regelmäßig in Aktien
der folgenden Gesellschaften.
Amtsgericht
Frankfurt am Main, HRA 29821
Jena, HRA 102181
Betroffene Werte:
Adecco Group AG
adidas AG
Airbus SE
Allianz SE
alstria office REIT-AG
Atos SE
Aurubis AG
AXA S.A.
Axel Springer SE
Banco Bilbao Vizcaya
Argentaria S.A. (BBVA)
Banco Santander S.A.
Sitz
Frankfurt am Main
Erfurt
Evonik Industries AG
Fielmann AG
freenet AG
Fresenius Medical Care
AG & Co. KGaA
Fresenius SE & Co. KGaA
GEA Group AG
Prudential Financial Inc.
Rheinmetall AG
Royal Dutch Shell PLC
Gerresheimer AG
GN Store Nord AS
Hannover Rück SE
RWE AG
SAP SE
Schaeffler AG
Schlumberger N.V.
(Schlumberger Ltd.)
Shire PLC
Siemens AG
HeidelbergCement AG
Hella KGaA Hueck & Co.
Société Générale S.A.
Software AG
-2-
BASF SE
Bayer AG
Bayerische Motoren
Werke AG
Beiersdorf AG
Brenntag AG
Cisco Systems Inc.
Colgate-Palmolive Co.
Comcast Corp.
Commerzbank AG
Continental AG
Covestro AG
Daimler AG
Danaher Corp.
Danone S.A.
Deutsche Bank AG
Deutsche Börse AG
Deutsche Lufthansa AG
Deutsche Post AG
Deutsche Telekom AG
Deutsche Wohnen AG
Dialog Semiconductor
PLC
Dollar General Corp.
[New]
Dürr AG
Engie S.A.
E.ON SE
Henkel AG & Co. KGaA
HOCHTIEF AG
STADA Arzneimittel AG
Starbucks Corp.
HUGO BOSS AG
Infineon Technologies AG
Intesa Sanpaolo S.p.A.
KION GROUP AG
Koninklijke Philips N.V.
K+S Aktiengesellschaft
L'Air Liquide - Société
Anonyme pour l'Étude et
l'Exploitation des
Procédés Geor
LANXESS AG
Linde AG
LVMH Moët Hennessy
Louis Vuitton SE
MAN SE
Merck KGaA
METRO AG
MTU Aero Engines AG
Münchener
RückversicherungsGesellschaft AG in
München
Murray and Roberts
Holdings Ltd.
Nestlé S.A.
Omnicom Group Inc.
STMicroelectronics N.V.
STRATEC Biomedical AG
Südzucker AG
Swisscom AG
Swiss Re AG
Symrise AG
Orange S.A.
Vonovia SE
OSRAM Licht AG
PayPal Holdings Inc.
Wirecard AG
WPP PLC
Zurich Insurance Group
AG
ProSiebenSat.1 Media SE
Mit freundlichen Grüßen
Landesbank Hessen - Thüringen
Compliance-Stelle
TAG Immobilien AG
Talanx AG
Telecom Italia S.p.A.
The Priceline Group Inc.
thyssenkrupp AG
Total S.A.
Unilever N.V.
United Internet AG
Uralkali PAO
Valéo S.A.
va-Q-tec AG
Volkswagen AG
-3-
 Finanzgruppe
Weitergabe von Anlageempfehlungen nach Art. 8 DVO1
hier: Offenlegung von Informationen und möglicher Interessenkonflikte
Diese Publikation wurde Ihnen am 16.06.2017 überreicht von der
Die Sparkasse unterliegt der Aufsicht der Europäischen Zentralbank und der
Bundesanstalt für Finanzdienstleistungsaufsicht. Die Sparkasse gibt diese
Publikation unverändert weiter. Sie hatte keinen Zugang zu der Publikation,
bevor sie diese vom Ersteller oder einer anderen weitergebenden Stelle
erhalten hat.
1
Delegierte Verordnung (EU) 2016/958 im Hinblick auf die technischen Regulierungsstandards
für die technischen Modalitäten für die objektive Darstellung von Anlageempfehlungen oder
anderen Informationen mit Empfehlungen oder Vorschlägen zu Anlagestrategien sowie für die
Offenlegung bestimmter Interessen oder Anzeichen für Interessenkonflikte.