A stronger JPY recently: the prelude of a competitiveness policy by China?

- "The Japanese yen has strengthened significantly in the last few weeks to the strongest level in the year against the USD."
- "Fundamentals in Japan remain conducive to strong JPY, due to structural current account surplus. The new situation of very low interest rates worldwide has de-facto annulled the possibility of strong carry trades, such as the ones that weakened the JPY between 2005 and 2007."
- "Against this already very conducive environment, the recent strengthening has been coincident with the announcement and implementation of the new CNY exchange regime."
- "In this paper we argue that today’s and tomorrow’s stronger JPY might be the
result of an economic policy strategy by the Chinese central bank (PBOC), which aims at preventing further loss in competitiveness for Chinese goods. If this is the case, there is a risk scenario on our central JPY forecast which would see the yen much stronger in FX markets against the USD and the CNY."
Natixis Flash Economics 366 20100716

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