Mrs Watanabe, not repatriation, driving yen volatility

There has been a lot of talk about Japanese insurers repatriating their foreign currencies into yen, but it was retail investors, not insurance claims, driving yesterday’s volatility.

Foreign exchange markets reflect such a diversity of views that they can often do baffling things. Yesterday’s moves in dollaryen are a good example.

One story doing the rounds since Japan’s devastating earthquake and tsunami last Friday is that the yen will inevitably rise as Japanese insurers sell their foreign currency to repay all their yen liabilities. And, sure enough, the Japanese currency rose after the disaster struck, proving to some that the repatriation...

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