Jean-Marie Mercadal, Deputy CEO in charge of Management at OFI AM

L'Agefi: What can be the effects on currencies of central banks waiting for the second wave of coronavirus?

Jean-Marie Mercadal: During this severe crisis, which caused great volatility in equities, the main exchange rates remained fairly stable. We simply note a rise in the eurodollar starting in May, more as a consequence of the decision to issue a debt for the first time in the name of the European Commission (EC), which removes the risk of the single currency dislocation. The reason for this relative currency stability is explained by monetary policies that follow the same logic everywhere: falling rates and convergence around 0%, which means that there is no longer a specific advantage for this or that currency in terms of return. The next possible movements of the dollar and the pound against the euro will probably be linked to economic developments, with the nature of Brexit still unknown.

How can you explain your optimism about the dollar-yen?

The yen has benefited from its defensive nature: it tends to rise in periods of great uncertainty as Japanese investors repatriate their capital, while they are more “natural” international investors in normal times. In the long term, we expect some normalization, which should push the yen down somewhat, which is otherwise quite expensive according to fundamental analyses