The yen will retain its status as a refuge from financial-market turmoil even amid concern the Bank of Japan will devalue the currency with more stimulus, according to Fred Goodwin, a strategist at State Street Corp.
“The markets are hugely vulnerable to some unknown unknowns,” Goodwin said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. The yen is “still the kind of place to bunker your money when you are nervous.”
Investors should buy the yen and sell the euro with the optimism from last week’s European Union summit unlikely to last, Goodwin said. The euro hasn’t traded higher 10 days after the previous meetings concluded, he said.
The Japanese currency slid versus a majority of its 16 most-traded counterparts after Economy Minister Seiji Maehara pressed the central bank yesterday for more stimulus and as U.S. Treasury two-year notes yielded the most since July against their Japanese counterparts.
Japanese exports slid 10.3 percent in September from a year earlier, leaving a trade deficit of 558.6 billion yen ($7 billion), the Finance Ministry said in Tokyo. The median forecast in a Bloomberg News survey was for a 9.9 percent decline. The decrease was the most since May 2011, two months after a magnitude-9 quake struck northeastern Japan.
The Bank of Japan announces its next policy decision on Oct. 30 and will also issue its revised economic projections for the 2012 and 2013 fiscal years and its first set of forecasts for 2014.
Japan’s currency declined 0.8 percent to 104.14 per euro at 1:47 p.m. in New York. It has weakened 2.6 percent against the shared European currency in the past month.
The yen “will reverse the recent losses,'' Goodwin said. The currency is “driven more or less by risk on or risk off.”