Goldman’s O’Neill Sees ‘Silly September’ as Yen Appreciates

Discussion in 'Forex' started by ASusilovic, Sep 21, 2009.

  1. Sept. 14 (Bloomberg) -- Foreign-exchange markets have embarked on a “silly September” as traders focus too much on government debt in the U.S. and U.K. while pushing up the value of the yen, said Goldman Sachs Group Inc.’s Jim O’Neill.

    “There is a very popular notion that you’ve got to sell the pound and the dollar because of the rising government debt, whereas the one that everyone’s seemingly buying is the yen,” O’Neill, head of global economic research at Goldman, said in a Bloomberg Television interview in London today. “It’s ridiculous” and “I think of it as ‘silly September.’”

    Currency strategists are trying to calculate which economies will benefit most from signs of a global economic recovery. While the dollar has dropped 11 percent in the past months on a trade-weighted basis, the yen has appreciated 9 percent against the U.S. currency and 6 percent against the pound since April.

    “If I look at the underlying fundamentals, virtually everything that drove the yen stronger in its floating exchange history isn’t there anymore,” O’Neill said. “The yen doesn’t deserve to be anywhere near this, and I don’t see it lasting.”

    The Democratic Party of Japan, which won the election last month to oust the Liberal Democratic Party that had governed Asia’s biggest economy for all but 10 months since 1955, has pledged not to increase new bond sales to avoid expanding a debt burden that’s the largest in the industrialized world. The Japanese economy grew at an annual 2.3 percent in the second quarter.

    The yen rose as high as 90.21 against the dollar today, the highest level since Feb. 12. The currency traded at 90.79 against the dollar as of 10:28 a.m. in London.

    Hatoyama Yen Repels Goldman Seeing 8% Slide on Growth
  2. O`Neill must still think that its "silly September"...:p