Abenomics Positive Impact Erased in Last 6 Months

Japanese Prime Minister Shinzo Abe’s limping “Abenomics” revival programme suffered a fresh blow on Friday when Britain’s vote to leave the European Union sent the yen soaring and threatened to make companies and consumers even more cautious.

The ‘Vote Leave’ campaign claimed unexpected victory over its ‘Britain Stronger in Europe’ rival, after 52 percent of Britons voted to support their plan to leave the 28-nation club.

Abe took office in December 2012 pledging to end decades of deflation in Japan and generate growth in an economy plagued by a shrinking, fast-ageing population with a mix of hyper-easy monetary policy, fiscal spending and reforms.

But the formula has largely failed. The central bank’s aggressive money-printing has failed to accelerate inflation, and anaemic economic growth has discouraged firms from raising wages and households from spending.

“In terms of Abenomics, it was already dead in the water. This will certainly sink it a bit further,” said Jeffrey Kingston, director of Asia studies at Temple University’s Japan campus.

The yen, seen as a safe-haven currency, soared briefly above 100 to the dollar, prompting Finance Minister Taro Aso to signal a readiness to intervene to stem excessive strength.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza