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Thursday, 18 Jul '13
Flash: JPY weakness caused by domestic factors? – BMO Capital Markets
Stephen Gallo at BMO Capital Markets projects the ramifications of an LDP-led coalition victory on the JPY.
BoJ aims aligned with LDP?
“We ultimately think that a portion of persistent JPY weakness should start to be viewed as a product of domestic factors rather than the ultimate goal of BoJ/Abenomics policy.”
Moreover, “We think the cornerstone of Abe’s policies is to gradually lean Japan away from the post-WWII keiretsu-based model of growth, which is heavily reliant on rigid labor laws, and Japan’s interlocked network of large manufacturers, their subcontractors and the banks which support them – this means aiming to boost domestic consumption, and reflate.
