Economic Interpretation: Yen Exchange Rate Is In A Stalemate.

According to Japanese media reports, the British referendum in June 23rd after winning the victory of Optima, the Japanese yen for the purpose of buying a hedge, but the trend came to an end.

After the second week of the referendum in June 27th, the yen exchange rate fluctuated at a level of 1 yen to 103 yen, and the yen exchange rate was in a stalemate.

Japanese media analysis said

The reason why the exchange rate is difficult to fluctuate is that the yen exchange rate is close to the "appropriate" level calculated based on the economic situation and the price situation.

The organisation for economic cooperation and development (OECD) calculated the purchasing power parity at the appropriate level of exchange rate based on price level, and concluded that the appropriate level of yen exchange rate in 2015 was 1 US dollars to 105 yen.

If the yen rate is at equilibrium, the sticky state of the yen should be long-term.

But this balance may also be easily destroyed.

A number of exchange rate analysts in Japan have pointed out that the sharp decline in the US Japan interest rate seems to be like a linkage, and the yen is gradually rising.

It is understood that the linkage between the US Japan interest rate and the yen exchange rate has become more and more obvious since May.

In July 1st, the US 10 year treasury bond interest rate was 1.378%, a 4 year low.

10 years in Japan and America

The interest rate differential also narrowed to nearly 1.6 percentage points.

According to Japanese media analysis, the interest rate differential between Japan and the United States has shrunk, which is the main reason why the yen exchange rate has been gradually pushed up in the context of global low interest rates.

Roka Yuji, chief exchange rate analyst at Da he securities, believes that there will be no expansion of interest rates in the future.

The theme of the current market is worries about the global economic downturn.

As China's economic growth slows down,

Under this background, the problem of Britain's "off Europe" is emerging.

Sasaki, head of market research headquarters at JP Morgan chase, said, "investors with rigid demand are beginning to decrease. If exchange rate quotes are dominated by speculators, spreads and yen exchange rates will become more easily linked.

If spreads are narrowed, interest rates will decrease, and the advantage of selling yen to buy dollars will disappear. "

Yamamoto Masamitsu, chief exchange rate analyst at Mizuho Securities, said, "as soon as the EU process is about to start, the opacity of the global economic outlook is growing, and investment and household consumption are easier to turn into defensive stance".

"The financial easing effect of the Bank of Japan is considered to be limited. Under this background, Japan's interest rate declines will also be limited," he said.

As a result, the US US interest rate will further shrink and the pressure on the appreciation of the yen will increase. "

There is also a view that Japanese investors' overseas investment will increase as the yen continues to rise sharply, which will lead to the depreciation of the yen.

However, behind the backdrop, the trend of global economic slowdown and low interest rates is at the forefront of buying yen.