Yen Set to Surge Further on BOJ Doubts, Says Pierpont’s Sinche

The yen will strengthen further as Japanese investors, disappointed with the Bank of Japan’s monetary-easing efforts, retreat from foreign investments, according to Robert Sinche of Pierpont Securities Holdings.

“The BOJ hoped that buying government bonds in Japan would encourage Japanese investors to move money out of the yen into foreign markets, and that would push the yen down,” Sinche, global strategist at Pierpont in Stamford, Connecticut, said yesterday in an interview on Bloomberg Television’s “Surveillance” with Tom Keene. “It’s not happening.”

The currency gained 0.7 percent to 95.37 per dollar yesterday in New York as domestic investors trimmed holdings of overseas bonds and stocks for a fourth week. Japanese money managers cut their holdings of foreign bonds by 386.9 billion yen and sold a net 221.8 billion yen of overseas stocks in the week ended June 7, according to figures released today by the Ministry of Finance.

The yen has advanced 8 percent since touching a 4 1/2-year low of 103.74 per dollar on May 22, the largest advance among major currencies, as investors bet the BOJ pledge to buy more than 7 trillion yen ($73 billion) of bonds monthly won’t be enough to end 15 years of deflation.

“We’ve gotten a lot out of the BOJ, but I think people keep expecting more and more and more and they’re not getting more,” said Sinche. “We’ve had some disappointments about how quickly they’re going to announce these other plans in terms of restructuring and revitalizing the economy.”

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