After the Kobe earthquake in 1995, yen gained 20% in 3 months. In 6 days after the recent disaster that occurred on March 11 the pair USD/JPY lost 3.7% as investors were concerned about yen’s repatriation by the Japanese investors estimated by 10 trillion yen ($124 billion).

Never the less, economists surveyed by Bloomberg expect Japanese currency to lose 8% in 2011 surviving the biggest decline in 6 years as Japanese growth and demand for money will fall affecting yen. On Friday, March 18, G7 nations accompanied Japan in the currency intervention undertaken to weaken yen that had reached the postwar maximum at 76.25 yen per dollar.

Analysts at Wells Fargo and Bank of Tokyo-Mitsubishi UFJ believe that yen will begin depreciating as the Bank of Japan injects cash in the country’s financial system, while the other central banks are getting ready to tighten monetary policy. Last week the BOJ added 38 trillion yen to Japanese financial market in one-day operations. In 1995 Germany’s Bundesbank and US Federal Reserve, on the contrary, reduced interest rates. The specialists think that Japanese policymakers will make enough efforts to weaken the national currency and look forward to further intervention, at least from Japan.

Wells Fargo sees yen’s rate easing to 86 yen per dollar in a year, while Bank of Tokyo predicts that Japan’s currency will drop to 89 by the end of 2011. The median estimate according to Bloomberg survey is at 88 yen per dollar.



Chart. Daily USD/JPY