The year 2007 should be finally that the rebound of the yen according to him

The euro rebounded yesterday, after the publication of an index Ifo German business leaders soaring morale. The index peaked at 108.7 points in December, compared to 106.8 points in November, which is its highest level since German reunification in 1990. According to the Ifo Institute, the German economy is "an extraordinarily strong boom." "This is a very encouraging number, which should maintain the assumption of new increases in rates in euro area," responded Audrey Childe-Freeman, Economist at CIBC. Result: the euro reached 1,3197 dollar yesterday in the evening, against 1,3072 dollar the previous day. Even the publication of a price index production in sharp rise in November in the United States ( 2), highlighting the risk of inflationary pressures in the country, argued that temporarily the dollar.

Rising against the dollar, the euro also recorded yesterday, a new record against the yen, 155,635 yen, its highest level since its inception. Beyond the Ifo the euro has been brought by the decision of the Bank of Japan to maintain unchanged interest rates, and the caution displayed by its Governor.

Before rising rates, which amounted to 0.25, the Bank of Japan prefer and expect to have on hand to other statistics on consumption and inflation, it considers "low", said its Governor Toshihiko Fukui yesterday. Low levels of consumption of households and inflation continue to be the two of Japan's economic Achilles ' heels. In this context, the Bank of the Japan no will therefore identified its rate once this year, after five years of zero interest rate policy.

Rate differential

Market operators, who expected a new break yesterday, before an increase in early 2007, were however disappointed. "The statements made by Toshihiko Fukui makes less likely an increase in the rate in January", said Mitul Kotecha of Calyon. "The Bank of the Japan will now probably wait until the publication of its quarterly forecast of February before making a decision," judge Vincent Chaigneau, responsible for policy rates and exchange rates for Société Générale.

In the meantime, this status quo takes place while the European Central Bank, continues to raise rates and that the US Federal Reserve maintained its own at a high level. A situation that will push operators away again from the benefit of the euro or the dollar yen, said Sophie Casanova, strategist at HSBC. The yen should further lower its differential rates with other currencies, feeds the "carry trade", a speculative practice of borrowing in countries with low rates of interest, such as the Japan for investing them here where they are higher. This phenomenon has already heavily weighed on the yen this year, on a background of very slow upwelling of rent money from the Bank of Japan. In this context, the Japanese currency should still remain at a lower level in the first half of 2007, according to Sophie Casanova.

Vincent Chaigneau view, then, the yen should go back, worn by a substantial increase in the rate of the Bank of Japan, while the Fed will begin to lower its own. With the growth of the Japanese economy, on a background of resumption of consumption, the Japanese Central Bank would raise rates by 100 basis points in 2007, 1.25, he said. "There is more risk for the Bank of the Japan to leave rates unchanged than to raise them", argues Vincent Chaigneau. The year 2007 should be finally that the rebound of the yen, according to him. Barclays Capital also provides a slight recovery of the Japanese currency next year.

Finally, elsewhere in Asia, the strong measures taken by the Thai Central Bank to stem the flight of its currency, the baht (read below), were down yesterday the Indonesian rupee, the South Korean won or the Malaysian currency, raising the confidence of investors.