Yen Has Further to Fall, Gold Rally Not Done Says Currency Strategist

The Japanese yen has dropped to 106 yen to the dollar since Prime Minister Shinzo Abe won a crushing election victory last weekend and ordered a new round of stimulus. Chris Gaffney, president of world markets at EverBank, said the Japanese currency could fall another five percent before the end of 2016. 'The yen has been the beneficiary of dramatic safe haven flows, but really doesn't have much going for it besides being one of the globe's most liquid currencies,' said Gaffney. In Gaffney's view, currency investors are on a search for yield so some of the best opportunities in the currency markets are going to be those currencies which have a 'positive carry' like the Brazilian real and Russian ruble. 'The Brazilian real and Russian ruble are interesting as their high interest rates continue to attract investment flows,' said Gaffney, adding that longer term investors should consider the Indian rupee because it has 'both a decent interest rate and fairly strong supporting fundamentals.'