JPY: Positive vibes from scandal threatening senior government officials - BBH
|Analysts at BBH suggest that the yen's 5% gain against the dollar this year makes it the second strongest of the major currencies here in the first quarter as investors have been given another reason not to resist the seasonal pressures that often see Japanese investors repatriate capital ahead of the end of the fiscal year later this month.
Key Quotes
“Many see the eruption of the scandal that threatens senior government officials as yen positive because it weakens those that ostensibly want to depreciate the yen through monetary policy. The scandal involves falsifying documents to conceal a sweetheart deal. The government sold state-owned land to a school-operator, reportedly with connections to Prime Minister Abe's wife at an incredibly low price. At the end of last week, the head of the National Tax Agency chief resigned over comments he made before the Diet about the case. There is also an investigation into the possible suicide of a local finance ministry official that handled the land sale.”
“There is pressure on Finance Minister Aso. Reports already suggest he will not attend the upcoming G20 meeting. The scandal is weighing on public support for the government. The goodwill won by Prime Minister Abe on his tough line on North Korea and China and more may have been lost. It is important for Abe to get closure on this as soon as possible or he may face a stronger challenge for party leadership in September.”
“Initial support for the dollar is near JPY106.20, which was today’s low before the pair moved higher. The JPY105 area is important psychological and chart support and the strongest support ahead of JPY100. In the second half of February, the dollar was turned back from JPY108. The cap has come down now to around JPY107.00, which is currently being tested.”
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