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FXstreet.com (Barcelona) - In a research note from HSBC Currency Strategy Team, David Bloom and workmates at the bank aim to dismantle the conventional logic over QE by the BoJ acting as a sustainable driver to to weaken the Japanese Yen.

HSBC states that while QE represents additional JPY supply and therefore should lower the value of the JPY, "the stimulus provided would also boost Japanese bond prices but would also likely leak into higher Japanese equity markets."

This, under HSBC view, "would boost foreign inflows into Japanese shares and unless QE spurs some equivalent outflow from Japan, the net impact of a monetary boost is more likely to be JPY positive even if the knee-jerk reaction of the market is to sell it. This is exactly what happened earlier this year when the BoJ re-engaged its QE engines."

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