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5 Jun 2013
Flash: Yen firms following Japanese PM Abe “growth” speech - BTMU
FXstreet.com (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes that the yen has firmed in the Asian trading session with USD/JPY falling back below the 100-level which has coincided with renewed domestic equity market weakness as the Nikkei 225 index has declined by just under 4.0% overnight.
He begins by commenting that the market reaction appears to reflect initial investor disappointment following a speech from Japanese Prime Minister Abe overnight outlining further plans for the government to boost economic growth in Japan, the so called third arrow of Abenomics. He writes, “Prime Minister Abe stressed that deregulation is the top priority for boosting growth particularly in the energy, health, and infrastructure sectors. The government plans to boost gross national income per capita by 3% annually and set up special economic zones to attract foreign businesses.”
Hardman notes that the special economic zones to be created in Tokyo and other big cities are expected to be allowed to introduce corporate tax cuts (not confirmed) and ease regulations to attract businesses allowing for high density construction. He writes, “The government also plans to boost power-related investment one and half times to JPY30 trillion over the next decade, and to double the balance of inward foreign direct investment to JPY35 trillion by 2020. PM Abe also stated that the government would allow the sale over the internet of most over-the-counter drugs, and plans to triple public-private infrastructure investment to JPY12 trillion in the next ten years.”
He begins by commenting that the market reaction appears to reflect initial investor disappointment following a speech from Japanese Prime Minister Abe overnight outlining further plans for the government to boost economic growth in Japan, the so called third arrow of Abenomics. He writes, “Prime Minister Abe stressed that deregulation is the top priority for boosting growth particularly in the energy, health, and infrastructure sectors. The government plans to boost gross national income per capita by 3% annually and set up special economic zones to attract foreign businesses.”
Hardman notes that the special economic zones to be created in Tokyo and other big cities are expected to be allowed to introduce corporate tax cuts (not confirmed) and ease regulations to attract businesses allowing for high density construction. He writes, “The government also plans to boost power-related investment one and half times to JPY30 trillion over the next decade, and to double the balance of inward foreign direct investment to JPY35 trillion by 2020. PM Abe also stated that the government would allow the sale over the internet of most over-the-counter drugs, and plans to triple public-private infrastructure investment to JPY12 trillion in the next ten years.”