What is wrong with the structural JPY weakness story?

Citi FX strategists on yen: "We believe the thesis of structural JPY weakness that has dominated in Japan in recent years is a typical example of a “narrative fallacy.” Essentially, this thesis focuses excessively on the trend following aspect of the yen weakness that has continued over the past ten years. Whether trend following is for JPY appreciation or JPY depreciation, the structural hypothesis causes market participants to underestimate the subsequent risk of a turnaround to JPY weakness or JPY strength. When looking to correct this structural hypothesis, the turning point to JPY appreciation in 1998 and to JPY depreciation in 1995 are useful refences. There are many similarities in the current fundamental environment to the 1980s as well. We expect a deeply rooted turnaround from JPY weakness to JPY strength in the long run."

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