Photographer: Kiyoshi Ota/Bloomberg

Japan Executives Saw Yen Gaining Most in 2016 Even Before Brexit

  • More than 100 corporate treasurers, strategists polled June 14
  • BOJ easing seen, though Fed policy more keenly watched

Japanese executives were expecting the yen to outperform its peers this year even before the U.K.’s decision to quit the European Union set off global market turmoil that drove the currency to its highest since 2013.

Some 57 percent of more than 100 traders, strategists and corporate treasurers polled at a Bloomberg seminar in Tokyo on June 14 expected the Japanese currency to stand out as the strongest performer against the greenback this year, with 15 percent choosing the Swiss franc and 12 percent picking the Australian dollar. While 76 percent of respondents expected further Bank of Japan easing in 2016, the potential for the U.S. to raise interest rates was cited as the biggest issue likely to affect the yen.

The yen had climbed 13 percent this year to 106.26 per dollar as of June 13, the strongest performance after the Brazilian real among more than 140 currencies tracked by Bloomberg. It surged to an almost three-year high of 99.02 last Friday after the Brexit vote, spurring strategists to raise their forecasts for the yen and prompting Japan’s policy makers to express concern at the rapid moves in the currency.

Respondents doubted that Japanese monetary officials could have an impact on the currency market. A fifth of the respondents said such efforts would actually boost volatility by encouraging speculators and a third said they could smooth price swings in the short term.

Other survey responses included:

  • 80 percent expected yen to range between 100 and 120 by yearend; 17 percent said it would appreciate beyond 100.
  • A majority said the current foreign exchange environment is more volatile than usual; one in five saw volatility about average 
  • 52 percent said biggest foreign exchange challenge for Japanese companies is managing currency exposure
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