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FX as a source of return: Is now the time to look again?

  The global trend towards lower interest rates, exacerbated by the COVID-19 crisis, has led to an environment of suppressed yields and asymmetric risk such that traditional investments no longer offer the most efficient avenue to express macro views. Currency markets can act as the last great equilibrator when it comes to levelling-up asset valuations, …read more

JPY: Has Japan lost the Currency War?

The currency war “truce” at the G20 meeting in February of this year has effectively placed political pressure on Japan to refrain from further depreciation of the yen. We investigate whether this has frozen USDJPY at its “fair value”. Although a naïve reading of PPP figures suggests that the outcome is reasonable, adjustment for productivity differentials suggests that the yen is now heavily overvalued versus the dollar, with attendant negative consequences for the Japanese economy.

SNB vs CNB : Currency Interventions

•The economic rationale for entering, and ultimately exiting a regime of exchange rate interventions is markedly different for the Czech National Bank relative to the Swiss National Bank.

•The central bank balance sheet, politics and nature of the underlying economy (and currency) are, amongst other things, important factors in helping determine the likelihood of a central bank continuing to intervene in the FX market.