HSBC: Sustained Yen Strength Depends on Structural Policy Shift by the Bank of Japan

1. HSBC points out that a structural adjustment in the Bank of Japan's underlying policy framework will be the key precondition for the Japanese yen to achieve a sustained recovery against the US dollar. 2. In a report released on Monday, analysts from the bank emphasized that unless the Bank of Japan pursues rate hikes more aggressively, the Japanese government sends clearer signals on the exchange rate issue—instead of consistently emphasizing that a weak yen is a “double-edged sword”—and slows the current pace of fiscal expansion, they still find it difficult to build sufficient confidence in the downward trend of USD/JPY.