Tags: Yens | depreciation | currency | war

Experts: Yen's Depreciation Could Spark Currency War

By    |   Sunday, 05 Jan 2014 10:18 AM

The yen has weakened abruptly in recent months thanks to the Bank of Japan's massive easing program, and the decline could trigger a currency war with Japan's neighbors, experts say.

The yen hit a five-year low against the South Korean won and a 15-year low against the Chinese yuan last week.

That brought statements of concern from South Korean and Chinese officials, who said they are closely watching the situation. The yen rebounded Friday.

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But the currency's overall weakness "should put a lot of pressure on the emerging Asian currencies," Michael Woolfolk, senior currency strategist at BNY Mellon in New York, told CNBC.

"We think they will push back, that there will be an escalation of currency wars and intervention is the most likely route."

The U.S. dollar hit a five-year high of 105.44 yen Thursday, and David Greene, head of dealing at AFEX Australia, told CNBC that the greenback can reach 112 yen this year.

"Whether other Asian economies, such as South Korea, see that as negative for their own
economies and start to play an intervention role or enter a currency war within the region remains to be seen," he said.

Some experts say the interruption in the yen's decline may last a bit longer.

"We may pause a little bit in dollar-yen because of the seasonals there, as Japanese investors typically bring home some of their foreign holdings or foreign exposure mid-January through mid-February," Greg Anderson, head of global currency strategy at Bank of Montreal in New York, told Bloomberg.

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The yen has weakened abruptly in recent months thanks to the Bank of Japan's massive easing program, and the decline could trigger a currency war with Japan's neighbors, experts say.
Yens,depreciation,currency,war
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2014-18-05
Sunday, 05 Jan 2014 10:18 AM
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