Yen traders looking to navigate a smooth handover of power at the Bank of Japan face an added complication from fiscal year-end flows which traditionally weigh on the currency.
(Bloomberg) — Yen traders looking to navigate a smooth handover of power at the Bank of Japan face an added complication from fiscal year-end flows which traditionally weigh on the currency.
The yen has just entered a traditionally weak time of the year, which lasts until early April, according to historical data compiled by Bloomberg. The data show the Japanese currency falling over 0.6% against the dollar from mid-February through April 5 on average over the last 30 years.
That’s a period that will cover government hearings with the nominee to be the next BOJ governor, Kazuo Ueda, as well as the last meeting from the current head Haruhiko Kuroda.
New BOJ Chief’s First Task Will Be to Keep Speculators at Bay
The seasonal weakness is not random and is related to flows into the Japanese fiscal year end on March 31, wrote Brent Donnelly of Spectra Markets, in a note this week.
“I have seen the flows at various banks over the years and thus I am a big believer in this seasonal anomaly,” he wrote.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.