Barry Gitarts

A Stronger Yen, Good for Japan and Good for You (EWJ)

My problem with this type of reasoning is 1) That interest rates are not part of the fundamentals, when they are at the core. 2) If you making a prediction on rates, bet on rates, not on currency based on whats going to happen to rates, too many chinks in the chain for these predictions to work out. Remember the dollar did not start apreciating until fed funds hit 3% in US, so what makes you say the yen would apreciate from a 25 or 50 BPS hike? 3) Japan is an export driven economy because they have to import as well, so a weaker dollar benefits them, while a stronger yen can stunt growth. 4) If the yen does apreciate, then the BOJ can just stand still and not raise rates. So for the BOJ to raise rates, they probably want to see yen depreciate first.