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Calling Chard: asparagus and leek risotto with chicken | SaltWireTOKYO - As the yen plumbs three-decade lows and pressure grows on Japan to intervene or make monetary policy changes, traders figure there is not much Tokyo can do to reverse the currency's slide while interest rates and momentum are heavily skewed against it.Related stories
Yet traders in foreign exchange markets, in thrall to a rising dollar, have barely stopped selling the yen through some 16 months of important and theoretically yen-positive shifts culminating in the BOJ’s first rate hike in 17 years in March. "It might take a while for the BOJ to normalise policy fully and that should start to help strengthen the yen but the key question is what the Fed does in the meantime."
At the ten-year tenor, U.S. yields are 375 basis points higher than Japanese yields, with the gap not far from over 400 bps touched last year - the widest in two decades. On all fronts investors see the central bank's ability to move or surprise markets as limited, particularly as it already made a landmark exit from negative rates at its meeting in March.
Even if the BOJ were to cut its 6 trillion yen a month purchases by around one trillion yen, it would only lift the 10-year yield about two basis points, said Nomura strategist Naka Matsuzawa - hardly enough to shift investment flows.
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