Yen's Fundamentals 'Different This Time Around,' Natixis Says

Summary

Natixis senior economist Trinh Nguyen argues the yen's fundamentals are different this time and sees room for a large move. She cites BOJ rate hikes expected to be steeper than the Fed, reshoring by Japanese investors and pension funds, attractive JGB yields, and deep yen undervaluation. She also points to the Korean won's past fast appreciation as a precedent.

• Trinh Nguyen says the yen is deeply undervalued on a real effective exchange rate basis.
• The BOJ is expected to hike more steeply than the Fed.
• Japanese pension funds may raise low domestic bond allocations, supporting capital reshoring.
• JGB yields are described as very attractive.
• The speaker sees a lot of room for yen movement.
• The Korean won is cited as a historical precedent of sudden appreciation after long weakness.