Parmenion's Thornton-Boelman: Will the yen ever listen?

Fed rate hike would strengthen dollar vs the yen

The Bank of Japan (BoJ) finds itself in an odd situation. Where often a central bank's credibility is based around keeping inflation under control and maintaining a strong currency, the BoJ instead needs the yen to be as unattractive a currency as possible, writes Jasper Thornton-Boelman, assistant fund manager at Parmenion Investment Management.

Unfortunately, the yen's safe-haven status is turning out to be harder than expected to shift, along with the country's current deflationary worries. But when continuous bouts of QE and a negative interest rate result in a soaring currency valuation, any assumption of rational market behaviour in response to policy must surely go out the window? Is the West headed Japan's way? Since negative interest rates were introduced at the end of January 2016, the yen has strengthened 13.13% against the dollar (to 31 October 2016). With September's announcement of a yield curve control str...