Halister News

(Bloomberg) -- The yen and the euro are too weak given their heavy current account surpluses and a major macroeconomic event could trigger aggressive demand for those currencies, according to Whiz Partners Inc.

• Currencies of countries with large current account surpluses have appreciated in the past when market volatility rose, says Hiroshi Fujioto, chief fund manager of the Tokyo-based global macro fund
  • Possible for yen to rise to 90 against the dollar over 2-3 years
  • Yen’s downside could be limited to around 115-120 per dollar
• "Political risks or event risks similar to the North Korean situation tend not to have a long-lasting effect on the market,” Fujioto says
  • Unless there’s an actual outbreak of war, which is highly unlikely, the North Korea factor is unlikely to trigger a financial crisis of a type similar to the turmoil caused by Lehman Brothers in 2008 or the information technology crisis in early 2000
  • We take a closer look at events which could trigger a contraction of credit that will impact the global financial system for a long time
• Market is at an important point for global macro players with the Federal Reserve raising interest rates and the European Central Bank preparing to normalize its accommodative monetary policy
  • Need to monitor macro data very closely to detect any change in fundamentals
• Trading opportunities for global macro players improve at times when central banks are normalizing interest rates, says Naoki Iwami, executive vice president and CIO of global fixed income investment at Whiz
  • This led Whiz to hire Fujioto 
  • Fujioto was formerly at Asset Management One’s currency management group which oversaw 550 billion yen in assets
• NOTE: Global macro funds adopt a combination of currency, interest rates and stock index- based trading strategies, monitoring global economic and monetary policies and making highly leverage currency trades using futures, forwards, options and spot

To contact the reporters on this story: Chikafumi Hodo in Tokyo at chodo@bloomberg.net; Komaki Ito in Tokyo at kito@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Patricia Lui

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