Forex Flash: Will BoJ monetary policy impact China? – Deutsche Bank

FXstreet.com (Barcelona) - With the BoJ aggressively on the front foot there are considerable discussions on what a weaker JPY means for various economies. According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “Given new assumptions on Japan's GDP growth and inflation, we think the aggressive monetary easing by the BoJ will lift Chinese export growth by 1ppt and China's GDP growth by 0.1ppt.”

Moreover, “the impact on RMB/USD will likely be minimal and Japanese QE may slightly boost net capital inflows to China via carry trades. The aggressive easing is also spurring a flurry of activity in domestic JPY credit markets.” they add. The Nikkei is reporting that a number of Japanese companies are rushing to issue JPY bonds to take advantage of the recent compression in credit spreads and the low bond yields in the wake of the BoJ's announcement last week. This mirrors a similar pattern to that seen in the US.