Ashton Whiteley - Yen Could Weaken as Global Economy Recovers

Ashton Whiteley says Japan is unlikely to reach its inflation target of 2 percent by next year.

Analysts at Shanghai, China-based investment house, Ashton Whiteley, say Japan’s currency will likely weaken as global growth picks up and that the country will probably not be able to hit its 2 percent targeted inflation by next year.

While Japan is benefiting from strong global expansion and regional growth, Ashton Whiteley analysts say the lack of inflation will prevent the yen from strengthening if the dollar weakens. Japan's current rate of inflation is below 1 percent.

With a strong global economic recovery underway, financial markets have largely stabilized and traditionally, the yen does not attract as much investment when the markets are steady. Ashton Whiteley analysts say that the yen would benefit in the event of geopolitical concerns or a weakening in the global stock markets.

Earlier this week, governor of Japan’s central bank, Haruhiko Kuroda stated that the Bank of Japan would need to persist with its ultra-easy monetary policy until Japan reaches its target of 2 percent inflation. Haruhiko added that the BoJ hoped this target would be reached before the end of the 2019 financial year.

Ashton Whiteley analysts say strengthening of the yen may occur if Japanese Prime Minister Shinzo Abe whose popularity has waned recently, were to step down.

Since coming to power, Abe has fought for strong monetary easing and stimulus in the interests of promoting economic growth. While Kuroda has also supported such policies, Ashton Whiteley economists say these economic strategies have led to a decline in the yen.

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Source: Ashton Whiteley