slotsnodeposit| The main force behind shorting the yen: the Japanese themselves?

SourceSlotsnodepositWall Street news

Citi points out that even if only 1 per cent of total household assets go into foreign currencies, that means more than 20 trillion yen ($128.4 billion) will be sold off, further exacerbating the weakness of the yen.

The prospect of a Fed rate cut this year, the Bank of Japan's eagle release and possible foreign exchange intervention have failed to boost the yen, while the Japanese appear to be "shorting" the yen.

Citi said in a May 10 report that Japanese household savings are steadily shifting to investment, which has an important impact on the trend of the yen.

Earlier, Bank of Japan Governor Ueda and male "eagle release" caused the yen to fall below the key level of 155 again. The report points out that the market has reached a consensus that the yen will remain weak for some time, and Citi expects the yen to remain at around 155.

Wall Street has previously mentioned that because some Japanese retail investors are housewives in charge of household finance, the market has cleverly given them a code name: Mrs. Watanabe (Watanabe is now the fifth largest surname in Japan. There are about 1.08 million people surnamed Watanabe in Japan.

Because Mrs. Watanabe has generally experienced the transition from the height of the bubble era to the extreme decline of the bubble era, because she has a stronger sense of risk aversion.

During the past 25 years of deflation, Madame Watanabe preferred to hold cash savings. As of the third quarter of last year, Japanese households held more than 2120 trillion yen ($14 trillion) in financial assets, of which 52.Slotsnodeposit.5 per cent is cash and deposits (about $7.35 trillion).

But today, the asset status of yen cash and deposits in Japanese minds has changed. At the end of the third quarter of fiscal 2024, household cash savings fell for the first time since the third quarter of fiscal 2012, according to the report.

Mrs Watanabe is increasingly shifting deposits to risky assets, the report said.

The report said that due to the large scale of deposits, a considerable amount of Japanese capital will flow into foreign securities investment under this investment trend. The report bluntly said that even if only 1 per cent of total assets went into foreign currencies, it would mean that more than 20 trillion yen ($128.4 billion) would be sold off, further exacerbating the weakness of the yen.

Foreign currency assets account for 50 per cent of total assets in GPIF, the Japanese government pension investment fund, which is typical of long-term diversified investors, according to the report.

However, the report also added that as the tendency to save is still strong, yen deposits still account for the majority of total assets, and the weight has not changed significantly.