Capital outflows likely to remain JPY negative until mid-2016

Capital outflows will likely remain negative for Japanese Yen until mid 2016. This figure does not include other pension funds which follow GPIF and only just began reallocating or a same reallocation by recently privatised Yucho and Kampo.

The private sector investors are likely to start selling JPY as US interest rates begin to rise. Overall the case for USD/JPY trading much higher in long term remains compelling.

"With little evidence that corporate Japan is benefitting significantly, we do not see valuation as a constraint on further losses. Our target for the peak in USD/JPY remains 312", says RBC Capital Markets.

Currently JPY is trading at 121.22 against USD.