Notion of a Japanese currency war is wrong, says Neptune’s Chris Taylor

Neptune Investment Management’s Chris Taylor, who runs the Neptune Japan Opportunities fund, says that suggestions Japan is engaging in ‘currency war’ tactics in relation to its weak yen policy are wrong.

We believe that Japanese corporations are no longer pure exporters, as they were 30 to 40 years ago, and are now fully fledged global multinationals with, more often than not, the majority of their production and revenues coming from outside Japan. The yen weakness is therefore of little or no competitive gain.

Instead it makes the value of those overseas activities worth more in yen and so lifts corporate profits in yen terms. This is what will enable Japanese firms to lift salaries and thereby underwrite domestic non-governmental consumption and GDP growth.

So, we believe that the very notion of current, and continuing yen weakness, being a traditional currency war is some 30 to 40 years out of date and completely wrong based on the shift in Japanese firms’ geographic revenue and profits base away from being almost entirely Japanese.


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