Beware The Yen Repatriation Move From Here (JYN, JYF)

The yen is getting a monster bid here, and is now at levels we have not seen in quite some time now that radiation levels around Fukoshima are dropping.

Watch 80.22 as the critical level for the yen.

If that level breaks, it could send the previously untouched foreign exchange markets into this crisis vortex of massive cash flows now pointing back to Japan.

Until the insurance companies heard that radiation levels around the stricken Fukoshima reactor were dropping, there was a question whether it would be possible to rebuild a lot of the country’s now-devastated real estate stock.

But now, they will almost certainly be needing to sell foreign-denominated assets — maybe Treasury debt, maybe not — and buy yen to spend their money back home.

Be wary of this trade. We have seen it in previous big earthquake scenarios and it now seems that a few of the question marks have been cleared up, so we are more likely to see it again.

Ultimately strong for those long yen or yen-based ETFs like the WisdomTree Dreyfus Japanese Yen ETF (NYSE:JYF) or iPath JPY/USD Exchange Rate ETN (NYSE:JYN).

Written By Tim Seymour From Emerging Money

Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.

About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.

Leave a Reply

Your email address will not be published. Required fields are marked *