JPY: Positive vibes from scandal threatening senior government officials

Analysts at BBH suggest that the yen's 5% gain against the dollar this year makes it the second strongest of the major currencies here in the first quarter as investors have been given another reason not to resist the seasonal pressures that often see Japanese investors repatriate capital ahead of the end of the fiscal year later this month.

Key Quotes

“Many see the eruption of the scandal that threatens senior government officials as yen positive because it weakens those that ostensibly want to depreciate the yen through monetary policy. The scandal involves falsifying documents to conceal a sweetheart deal. The government sold state-owned land to a school-operator, reportedly with connections to Prime Minister Abe's wife at an incredibly low price. At the end of last week, the head of the National Tax Agency chief resigned over comments he made before the Diet about the case. There is also an investigation into the possible suicide of a local finance ministry official that handled the land sale.”

“There is pressure on Finance Minister Aso. Reports already suggest he will not attend the upcoming G20 meeting. The scandal is weighing on public support for the government. The goodwill won by Prime Minister Abe on his tough line on North Korea and China and more may have been lost. It is important for Abe to get closure on this as soon as possible or he may face a stronger challenge for party leadership in September.”

“Initial support for the dollar is near JPY106.20, which was today’s low before the pair moved higher. The JPY105 area is important psychological and chart support and the strongest support ahead of JPY100. In the second half of February, the dollar was turned back from JPY108. The cap has come down now to around JPY107.00, which is currently being tested.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.