Bloomberg News

Nordea Bank Says Sell Yen, Buy Dollar on Japanese Export Slump

June 29, 2011

June 29 (Bloomberg) -- Nordea Bank AB recommends purchasing the dollar and selling Japan’s yen as the Asian nation’s declining exports will erode its currency’s status as a haven.

The bank recommends buying the dollar at 81.01 yen and targeting an appreciation to 84 yen. The trade should be scrapped if the dollar depreciates to 79.5 yen, Stockholm-based strategists Jonas Thulin, Daniel Nilsmo and Nils Rosendahl wrote in a research note today.

“With Japan currently running a trade deficit, we question for how long its safe-haven status will persist, as the country previously has been able to borrow cheaply despite massive government debt,” the note said. “Japan might not be able to access credit markets as cheaply as it previously has, which should weigh on the yen.”

The dollar weakened 0.4 percent to 80.83 yen as of 2:09 p.m. in London.

Japan’s exports fell more than economists estimated in May, adding to signs the world’s third-largest economy may struggle to recover from the March 11 earthquake and tsunami.

Exports decreased 10.3 percent last month from a year earlier, the Finance Ministry said June 20, while economists had projected an 8.4 percent decline. It was the second-biggest trade deficit since comparable data were made available in 1979.

--Editors: Keith Campbell, Peter Branton.

To contact the reporter on this story: Garth Theunissen in London gtheunissen@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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