Japanese yen underperformance ´overdone´ - Lehman Brothers
Monday, March 28, 2005 12:15:48 PM
afxpress.com
Japanese yen underperformance 'overdone' - Lehman Brothers SHANGHAI (AFX) - The Japanese yen's recent underperformance "looks overdone," and the picture for the Japanese currency "looks particularly constructive at the moment," said US investment bank Lehman Brothers
In its weekly global foreign exchange report, Lehman said that throughout the dollar's recent selloff, yen positions had remained effectively short, arguing strongly against further yen weakness on reduction of short dollar positions
It also noted a string of positive news economic from Japan, saying that last week's jump in all-industry output, the largest one-month rise on record, confirmed that the economy got off to a strong start in January. At the same time, it said, the annual land price survey pointed to positive gains in inflation in certain city centres for the first time in 17 years
The bank said it attributed the disappointing yen performance to fiscal year-end distortions and "somewhat dubious concerns about rising oil prices." The fiscal year-end distortions, if they exist, should fade by the end of next week and oil prices appear to be stabilising for now, it added
Lehman said this would be "a very good opportunity to add to yen exposure," although the next two weeks would provide a "critical test." It said another round of critical Japanese economic data, including the quarterly Tankan sentiment survey, should confirm whether the recent good news is more than a temporary blip
On other Asian currencies, Lehman said recent declines look to be more a story of dollar strength than Asian currency weakness. While political turmoil between China and Taiwan has added some policy event risk to the region, "fundamentally very little has changed on the Asia story," it said
In its weekly economic report for Asia excluding Japan, released alongside the global foreign exchange report, the bank was bullish on Asian currencies
It said the Chinese yuan will appreciate by about 5 pct against the dollar this year, while Malaysia is seen abandoning the ringgit peg and most other Asian currencies are expected to appreciate 10-20 pct against the dollar |
