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Yen strength still hinges on BOJ hike, not capital repatriation (or intervention!), Goldman says
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That matters for the broader yen thesis running through recent coverage, since it implies unhedged repatriation is unlikely to be the mechanism that delivers sustained yen strength.
Summary:Goldman Sachs economists say Japanese investors continue to seek foreign investments despite Tokyo's stated plans to redirect capital flows toward domestic markets.
Goldman says a Bank of Japan interest rate hike next month would help deliver longer term strength in the yen.
Goldman said it may take time before such a policy shift becomes visible in the flow data, and stopped short of ruling out a change altogether.
If Japanese capital is not coming home despite policy encouragement to do so, then repatriation is unlikely to be the channel through which sustained yen strength eventually arrives.