Japan’s Weakening Of Yen Just Beginning

Bank of Japan Governor Haruhiko Kuroda’s efforts to weaken the yen in a bid to stimulate economic growth and inflation in the world’s third-biggest economy are likely to be relentless and successful, macro investment manager Mark Yusko told attendees today at ETF.com’s second annual Global Macro Conference in New York.

“Kuroda-san is a good samurai—he’s serious,” said Yusko, the chief executive and chief investment officer of Morgan Creek Asset Management.

“He’s going to continue to flood the market with liquidity,” he added, referring to the Japanese government’s almost-three-year-old “quantitative easing” program.

Yusko said that when Abenomics—the economic revitalization program named after Japanese Prime Minister Shinzo Abe—began, it took 78 yen to buy $1. That’s now up to around 123, and is likely to reach 140 before long.

“These guys will get there, because they’re on a mission from God,” Yusko said.

The effects of Abenomics are plainly evident in the one-year chart below.

It compares the returns of the unhedged iShares MSCI Japan ETF (EWJ | B-99), the currency-hedged version of the same fund, the iShares Currency Hedged MSCI Japan (HEWJ | D-38) and the actual currency cross in an ETF wrapper, the CurrencyShares Japanese Yen Trust (FXY | B-99).

Chart courtesy of StockCharts.com