Euro yen forecast for 2018 and 2019

Euro yen forecast for 2018 and 2019

Special our economic forecasts consultation with the forecast of bags, currency, macro data, Euribor, interest rates for 2018 and 2019 …

The  Analysis Department Bankinter  says its  Strategy Report for 2018 and 2019  its  forecast for 2018 euro and 2019 yen.

euro yen forecast 2018 and 2019

According to our estimates the crossing euro yen will move in the range 2018 130/140 and 135/145 in 2019 and crossing dollar yen will in the range 107/123 2018 and 108/126 in 2019 .

Analysis of euro yen forecast

The economy in Japan responds positively to the  ultra-expansive monetary stimulus  from the Bank of Japan. At the last meeting of the BoJ (21 December), complying with the script, I remained unchanged (with 1 vote against compared with 8 votes in favor) its monetary policy :

  1. Intervention type negative (-0.1%).
  2. The asset purchase program at a rate of 90 trillion yen / year.
  3. In order to maintain the yield curve with positive returns ( IRR of 10 – year bonds> 0.0%).

Haruhiko Kuroda , the governor of the BoJ , reaffirms that  no hurry to remove monetary stimulus  because, despite the rise in prices in November,  inflation remains low and far below the target of 2% , an objective whose fulfillment delayed until 2019 / 2020. Specifically, the CPI (annual rate) in November rose to + 0.6% vs. + 0.5% and + 0.2% estimated earlier. This increase is explained by the base effect of energy prices, as core inflation remains at levels approaching zero (+ 0.3% vs. + 0.2 in November% previously).

So it makes sense to think that the BoJ monetary policy will not harden or normalize in the medium term. It has proven to work. In any case, we are inclined to the contrary, ie, additional monetary stimulus (expand the asset purchase program or raise the inflation target).

This scenario is favorable for the yen tends to weaken . Three main arguments being of our approach:

  • Abundant liquidity (monetarism and monetarism).
  • Interest rate differential in the short / medium term (negative vs. Fed BoJ / ECB gradually rising).
  • Japan growth differential compared to other economies (US and Europe)

In short,  the yen should depreciate but the pace will slow . According to our estimates the euro yen cross will move in the range 130/140 2018 and 135/145 in 2019 and crossing yen dollar will in the range 107/123 2018 and 108/126 in 2019 .

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