Analysts at JPMorgan claim that Japanese yen will once again rise to this yearís maximum versus the greenback as Japanese investors avoid investing in overseas assets willing to reduce risk following the nationís biggest earthquake that took place on March 11.

The specialists estimate repatriation performed by Japanís investors and companies by 10 trillion yen ($123.5 billion). In their view, such situation is opposite to what may be seen in elsewhere in the world where the demand for higher-yielding assets is increasing.

In addition, itís necessary to take into account that Japan has one of the biggest current-account surpluses in the world that also creates upward pressure on yenís rate. The data is released tomorrow. Economists surveyed by Bloomberg News expect that the nationís current-account surplus increased from 1.64 trillion yen in February to 1.75 trillion yen in March. The bankís strategists donít think that the current account may fall into deficit even as the impacts of the disaster may shrink the nationís trade surplus.

Weaker demand for the greenback is one more positive factor for yen. Specialists at JPMorgan claim that for the pair USD/JPY to stabilize, US interest rates have to be much higher than those in Japan, while now these 2 countries pursue the same policies of the extremely low borrowing costs. The analysts think that the Federal Reserve wonít raise the rates earlier than at the end of 2012.

According to JPMorgan, US dollar will fall to 78 yen by the end of March next year. The bank doesnít expect more currency interventions of Japanese authorities to weaken the national currency as the market has become less volatile since the earthquake. The specialists think that any intervention decision will based on volatility and not on a certain level of exchange rate, so Japan wonít be preventing yen from gradual appreciation.



Chart. Daily USD/JPY