John Vail on*:

Why The Yen Should Not Strengthen In A Crisis

“Many Japanese institutional investors tend to de-risk due to geopolitical crises, with the Yen strengthening on actual or the perceived likelihood of capital repatriation to Japan. The current situation seems no exception, so far. Some investors are even saying that if a missile hits Japan, then Japanese insurers would be forced to sell overseas bonds to pay claims, thus strengthening the Yen. However, any major crisis in the Northeast Asian region, especially one involving a crisis within Japan’s borders, is likely to be handled very aggressively by the Bank of Japan (BOJ), with it bending the rule-book as much as the Fed did during the Global Financial Crisis or as the ECB has done in the past five years.

Thus, it is easy to envision the BOJ:” ... Read more

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