Currency Analyst since 2010

Is Abenomics doomed?

Prime Minister Shinzo Abe’s failure to announce ground-breaking structural reforms at his speech last week and the Bank of Japan’s inaction in addressing volatility in the government bond market, have led to concerns over whether “Abenomics” can deliver on its promise of reviving growth.

Abe’s program consisted of 3 arrows (see the picture below). Last week Prime Minister introduced the third arrow, and it turned out that his growth strategy contains few innovative ideas and differs little from growth programs announced by his predecessors.

Sumitomo Mitsui Trust Bank: “We’re going to have to reduce our expectations for Abenomics. The initiatives are too small. The direction is right but the comments are all long-term. It looks like things are going to move too slowly.”

Credit Agricole: “Investors are unwilling to short the yen when there is a lack of follow-through on policy promises, and at the same time, high risk aversion. This move [higher in the yen] may persist for at least a few weeks, but it's not a multi-month move.”

HSBC: USD/JPY may slide to 93 yen in the coming weeks, but the bank is sticking to his long-term forecast of 99 yen by the end of the year.

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