Is the yen overvalued?
Forex Analysis - 15th June 2012
Written by Imran Allana
FOREX MARKET ANALYSIS 15/06/2012
Fears the Japanese yen may be overvalued has sparked speculation in recent days of the possibility of further intervention from the Bank of Japan (BoJ). The International Monetary Fund (IMF) has recently released a report on the Japanese economy stating the yen rate has appreciated over the past year, partly due to safe-haven capital inflows, and now the market is questioning whether the currency may be overvalued.
With the eurozone in turmoil again and Spain stepping into the debt crisis spotlight, the decision the BoJ’s are facing is reminiscent of Greece. The Greek Ministry of Finance (MoF) stated they would adopt a ”wait and see” approach with regards to whether the situation surrounding Europe would improve or worsen. However, this time the decision may be forced upon them with Japanese exporters suffering more than ever and the BoJ struggling to enforce, or even reach, the one percent inflation target.
Timing will be key for those traders who have been burnt in the past by an overvalued yen. It has been speculated that the BoJ will most likely wait until July when they review their inflation figures before they decide whether to intervene. By that time, Greece will hopefully have a new government in place and we may be a few steps closer to some sort of resolution with regards to Italy and Spain, which should help with the Japanese monetary easing decision.
Important note: These technical and research reports are provided to easy-forex as a subscriber of third party providers. They are provided for informative purposes only and in no way can they be considered as a recommendation by easy-forex to you to engage in any trade. Hence, easy-forex shall not be held responsible for any outcome of trading decisions, in regards with these reports or similar reports. You hereby acknowledge that using the information entailed in these reports is at your sole responsibility and you will have no claims with regards to these reports against easy-forex. If you do not agree to this, you are strongly advised not to use these reports.