You are in Japan. I have to ask you kind of what you're
hearing on the ground. Rosalind Chin here.
Did Japan or did they not intervene in the currency?
Yeah. So, you know, I think they did likely
intervene in the ethics markets, you know, given the market moves in somebody
in the deals, it did reserve data indicating.
But we don't we haven't got the confirmation from the market.
We'll get the data from the minister of finance at the end of this month.
But, you know, I think intervention likely happened.
You know, I think the concern there continues to weigh on the dollar in the
coming days as well. Right.
And we had the meeting this week. And I understand that you think that
they won't do anything as far as their policy settings are concerned.
So that takes me to the next question on the yen.
How sustainable is the strategy to keep intervening?
Because they do have reserves. They do have some money to keep doing
that. But how long can they keep doing that?
Yes. Yes.
So, you know, you're right. You know, we do not expect to be ready
to change his policy. Given that, you know, they had
previously said the ethics not going to drive the policy.
And, you know, if they put continued focus on the wage growth in Japan, which
remains weak. So, you know, at some the investor is,
you know, are seeming to be expecting some moves in the from the DOJ.
I think that, you know, the post meeting reaction could be further weakness.
But, you know, given, you know, the first intervention in September happened
just up that the DOJ, when the yen depreciated, you know, quickly.
So I think, you know, the intervention. You know, definitely reads on our meter,
which continues to weigh on the current on the currency here.
But, you know, I think that the minister of finance, you know, the ethics, Chief
CAC, had said, you know, they had basically unlimited amount of ammo to
defend the currencies. You know, it's not unlimited in a
medical way, but they do have, you know, quite a significant amount of reserves,
you know, which amounts to about 130 trillion yen, of which there is three
trillion in September and maybe another five or so according to some of the
estimates at the latest round. But, you know, they still have
significant amount of the. Yes.
Do you? So I think, you know, they have a good
ammo to defend it. I mean, nothing's going to change until
you change some of the fundamentals that you can intervene as much as you like.
But you have the same things that when you've done so.
So is it high time that yield control was actually changed or even abandoned?
I have no idea. What are your what's your thinking on
this? Yes.
So, you know, as I mentioned, we don't think the building is going to change
his policy at this week or at least through the end of Clinton's term,
which, you know, which is April. As you know, because it has definitely,
you know, it's starting to focus more on the wage growth.
And, you know, Governor Kuroda, etc. Even if they move the set, you'll have
control by 25 basis point. What does it do?
The dollar yen when the Fed is doing 75 like every meeting.
So, you know, I think the prime tool of, you know, defending the currency is
ethics intervention and ministry finance.
And, you know, the Bank of Japan, I think will likely to continue this
policy easing. But, you know, to your point, I think
that, you know, the BFG could oh, the minister of finance could slow the pace
of the yen depreciation. But the ultimate direction of the
currency is driven by the monetary policy differentials, which is driven
more by that. That sort of fed policy is definitely
the driver of the dollar and in a fundamental sense.
OK. I guess everyone's just trying to hold
on as ISE I can tell. Maybe are signs of the dollar peaking.
I'm wondering, is it euro? When do you think that I can speak and
what is that likely catalyst? Yes.
So, you know, I think in terms of dollars yen, we spoke about both the
dollar and Japan's current account. We expect that, you know, that to finish
hiking cycle in February next year at the five in a five, a quarter percent.
And from there on in the second half of next year, we do expect some cuts into a
policy rate. So we could begin to see some a sea
change direction or change from that, that maybe in the first half of the next
year. And, you know, you start to see some
dollar picking up a additionally for the dollar yen.
What's important is the Japan's dynamics subsisted the current account because
oil prices have come up from 120 to 90 now.
Japan reopened its border so that you can start to improve the current account
in Japan. Currently, it's basically zero ish to
about plus 10 or so trillion yen into next year.
So that should start to also put some upward pressure on the yen.