BOJ negative rates makes further Yuan devaluation inevitable - Ashraf Laidi

FXStreet (Bali) - According to Ashraf Laidi, Founder of Intermarket Strategy Ltd, last Friday's Yen devaluation by the BOJ following the decision to adopt interest rates, means more unfriendly Yuan devaluation is ahead.

Key Quotes

"The yen's violent ascent of the past 5 weeks was instrumental in the BoJ's decision, but will also reduce the likelihood of Tokyo adopting structural measures and may even postpone the next tax hike. The BoJ said it is ready to slash rates further, a decision, which reflects total desperation from the central bank as all other methods have failed."

"As Japan continues to devalue its currency via negative interest rates, China may well be able to continue weakening its currency, especially as JPY makes up for 15% of the CNY's index under the China Foreign Exchange System. The negative market implications from further CNY devaluation versus the positive implications of JPY devaluation force an asymmetric reaction to these events."

"China will have no choice but to further devalue its currency as CNYJPY rose 75% from 2011 to 2015 and fell by only 12% since June. Further devaluation is inevitable and its impact on global markets will be negative, including the rising yen."

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.