www.varchev.com

USD/JPY will likely go higher. Japan insurers may cut hedging

Japanese life insurers may start running more currency risks as hedging costs hit an 8-year high and the case for protection against a stronger yen looks increasing weak as BOJ and Fed policies diverge, Bloomberg strategist Masaki Kondo writes.

Three-month hedging cost, derived from USD/JPY forwards, rose to 1.91% on Tuesday, highest since October 2008, from 1.72% at end of fiscal first half on Sept. 30.

Yen tumbled 10% against dollar in the past 2 months and analysts are calling for even further declines in the Japanese currency due to widening policy differentials between BOJ and the Fed.

Pricier protection against a stronger yen and an increasingly weaker Japanese currency may prompt life insurers to reduce their hedging levels from a 5-year high .

Japan’s nine biggest life insurers together boosted hedging ratio to 63.5% in 1H, highest since March 2011, from 55.1% on March 31.

Bloomberg


 Varchev Traders


Read more:
RECCOMEND WAS THIS POST USEFUL FOR YOU?
If you think, we can improve that section,
please comment. Your oppinion is imortant for us.
WARNING: Any news, opinions, research, data or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. Varchev Finance Ltd. expressly disclaims any liability for any lost principal or profits which may arise directly or indirectly from the use of or reliance on such information. Varchev Finance Ltd. may provide information, quotes, references and links to or from other sites and blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the sites, blogs or other sources of information.
Varchev Finance