The yen is on a 40-year technically driven climb and that means the Bank of Japan needs to push ahead with radical stimulus next week to avoid this year's surge accelerating, according to Tokyo-based hedge fund GCI Asset Management.
BOJ Gov. Haruhiko Kuroda should cut negative rates further and use so-called helicopter money, Tatsuhiro Iwashige, 52, chief foreign-exchange strategist of the investment solutions group at GCI Asset, said in an April 15 interview. That would drive the yen back above 110 per dollar for a while, he said. GCI Systematic Macro Fund earned 19 percent in the first two months of the year after buying the nation's sovereign notes, returning 173 percent since its inception in February 2014, the firm's head of the quantitative research said last month.
"If Japanese-style helicopter money is implemented, the dollar may temporarily recover to 115 levels," said Iwashige, who began his career in foreign-exchange markets in 1989 as a trader and currency analyst at Manufacturers Hanover Corp. before joining GCI in 2014. "Interest rates should be cut to negative 0.5 percent to give a sense the BOJ is done cutting rates. Kuroda needs to do it in a set."