BoJ Governor Kuroda has stated before the Japanese parliament this morning that he does favour a weaker JPY “as long as exchange rates move stably in a way reflecting economic fundamentals”, notes BNP Paribas.
"These comments correct his reference to the JPY’s real effective exchange rate being very weak already last week. The JPY jumped on his original remarks. We believe the correct interpretation of Japanese policy is that officials favour a steady JPY decline which assists Japan to reach its 2% CPI goal," BNPP argues
"We target 130 in USDJPY by early next year as the Fed starts to hike from September – authorities are unlikely to object to such a steady JPY decline. Temporary EUR strength , however, has likely taken EURJPY to overvalued levels.," BNPP projects.
