Back
28 Feb 2014
Flash: Japanese corporate flows should remain JPY negative in March - Nomura
FXStreet (Bali) - Nomura notes the increasing focus on the possibility of Japanese firm's repatriation as we Japanese fiscal year-end approaches.
Key Quotes
"Repatriation flows jumped to JPY781bn ($7.6bn) in March 2013 from JPY132bn the previous month. Flows were also stronger in April last year than usual and
total repatriation from March to April last year reached JPY1668bn ($16.3bn)."
"Japanese firms are expected to repatriate more money when the demand for loans is strong. The amount of repatriation has been also bigger following the introduction of Japan‟s version of the Homeland Investment Act in FY2009."
"Based on these factors repatriation in March this year is estimated to be slightly bigger than last year. We estimate that there will be around JPY830bn ($8.1bn) of repatriation in March this year."
"While repatriation flows could be negative for USDJPY in March, USDJPY's recent
performance has been not weak. In fact, USDJPY has appreciated on average by 1.2% during March since 2005. USDJPY tends to decline between 10 and 20 March, which suggests Japanese firms increase repatriation by 20 March, a couple of business days before the actual fiscal year-end. However, it tends to recover from the decline in the last 10 days of March. The flows shown in the balance of payments do not necessarily match the timing of FX transactions. Thus, it is unsurprising that USDJPY does not decline while repatriation flows increase."
"Furthermore, Japanese firms are more likely to be sellers of JPY this March, as rushed demand ahead of the sales tax hike will boost imports. The seasonally adjusted current account balance has been in deficit for the fourth month in a row, and we expect the deficit to continue by March. FDI outflows are also likely to stay high, as Japanese firms' appetite to increase their business outside Japan remains strong. Thus, we judge that corporate flows will remain JPY negative in March, even though repatriation flows rise."
Key Quotes
"Repatriation flows jumped to JPY781bn ($7.6bn) in March 2013 from JPY132bn the previous month. Flows were also stronger in April last year than usual and
total repatriation from March to April last year reached JPY1668bn ($16.3bn)."
"Japanese firms are expected to repatriate more money when the demand for loans is strong. The amount of repatriation has been also bigger following the introduction of Japan‟s version of the Homeland Investment Act in FY2009."
"Based on these factors repatriation in March this year is estimated to be slightly bigger than last year. We estimate that there will be around JPY830bn ($8.1bn) of repatriation in March this year."
"While repatriation flows could be negative for USDJPY in March, USDJPY's recent
performance has been not weak. In fact, USDJPY has appreciated on average by 1.2% during March since 2005. USDJPY tends to decline between 10 and 20 March, which suggests Japanese firms increase repatriation by 20 March, a couple of business days before the actual fiscal year-end. However, it tends to recover from the decline in the last 10 days of March. The flows shown in the balance of payments do not necessarily match the timing of FX transactions. Thus, it is unsurprising that USDJPY does not decline while repatriation flows increase."
"Furthermore, Japanese firms are more likely to be sellers of JPY this March, as rushed demand ahead of the sales tax hike will boost imports. The seasonally adjusted current account balance has been in deficit for the fourth month in a row, and we expect the deficit to continue by March. FDI outflows are also likely to stay high, as Japanese firms' appetite to increase their business outside Japan remains strong. Thus, we judge that corporate flows will remain JPY negative in March, even though repatriation flows rise."