Chris Towner, director of FX advisory services at foreign currency specialists HiFX comments on the fall in Japan’s Nikkei
“Sometimes you can get too much of a good thing and this is the case for the Japanese.
“Having wished for a couple of years now for their currency to weaken, the market started to listen to them in November of last year when the then opposition LDP party talked about doubling the inflation target to 2%. This on top of previous large bouts of intervention has arguably done enough to start to turn the tide for the Japanese yen. In November EUR/JPY was trading at 100 and USD/JPY was trading at below 80. By January EUR/JPY touched 120 and USD/JPY was closing in on 90.
“The Japanese still want their currency to weaken further. In fact the average for USD/JPY over the past decade stands at 101; however the problem now for the Japanese is that the move is happening too quickly. It is always the case in politics that you cannot make everybody happy at the same time and the Japanese exporters have been very glum over the past few years only to see their fortunes turn for the better over the last couple of months. However it is now the turn of the importers in Japan to point out that the Japanese yen is weakening too quickly, making the cost of their products climb rapidly in price in yen terms.
“The answer for the Japanese is a steady depreciation. A weaker currency is just one of the things that Japan requires to try and resuscitate this zombie economy. The UK is frustrated by the underperformance of its economy and the fact that it will take till 2015 until we return to the 2008 GDP equivalent; however this has been two decades for the Japanese! Their patience has expired. Bold action was required and now is being put into practice. The yen in the bigger picture has a lot further to fall!”
HiFX is the UK’s premier provider of foreign exchange and cash deposit services. Established in 1998, HiFX launched the first online international money transfer service with live exchange rates and no hidden fees. Working with over 40,000 private individuals each year and approximately 2500 corporate clients worldwide managing their foreign exchange and currency needs, HiFX offers both companies and private individuals significantly better exchange rates and exceptional service.
The breadth of activity HiFX helps its clients with is far reaching. For private individuals activity typically includes overseas property acquisition, migration overseas, salary transfers, international pension transfers and high value asset purchase. For corporate clients it is an effective way to pay overseas suppliers and staff, receive international payments, settle invoices and conduct business abroad. Last year HiFX advised on and executed over £9 billion in foreign exchange and has in excess of £2 billion placed on the Money Markets on behalf of our commercial customers.
HiFX systems work to 99.999% uptime standards, and just like the worlds banks are independently tested. HiFX also uses independently verified online security with the highest level of VeriSign certification. HiFX is the service provider for the Post Office’s ‘International Payments Service’. If you send money overseas through the Post Office, you will be talking to HiFX.
HiFX standing in the market is highlighted by the number of visitors to its website. In 2010, it had 4.2 million visitors and 1.3 million unique users to its website.