Will the value of the yen fall further? Increase? Experts’ opinions are mixed
“Yen weakens further…Japanese authorities are likely to intervene in the market 2-3 times.”
“The yen strengthens at the end of the year… to 146 yen by March next year.”
The value of the yen against the dollar is falling. On the night of the 3rd, it touched the psychological resistance line of ‘150 yen per dollar’, and attention is focused on whether the yen will continue to fall in the future. While experts’ opinions are mixed, predictions were made that the value of the yen would fall beyond 150 yen to 160 yen within the year.
According to the Asahi Shimbun on the 5th, Daisuke Udo, chief strategist at Sumitomo Mitsui Bank, predicted that the yen will weaken further in the future based on price trends.
Strategist Udo pointed out that although the U.S. continues to raise interest rates to suppress high inflation, “inflation will continue in the future as the cost of realizing decarbonization increases and the labor force decreases.”
He said that in a situation where the U.S. Federal Reserve (Fed) cannot change its stance of financial tightening, the Bank of Japan is likely to maintain monetary easing for the time being. Therefore, it is predicted that the situation in which the dollar will become strong and the yen will be weak will continue.
Strategist Uno said, “If the Bank of Japan does not move until next year’s Spring Struggle (deposit negotiations between business and labor held every spring) is seen, the yen exchange rate is likely to fall to 160.35 yen within the year, the level at which the yen has been weak since April 1990. “There is also,” he observed.
According to the Nihon Keizai Shimbun (Nikkei), Edward Moya, senior market analyst at Oanda Securities, claimed that the Japanese government has already intervened in the market once.
Earlier, at 11 PM (Korean time) on the 3rd, in the New York foreign exchange market, the yen weakened rapidly and hit 150 yen per dollar. This has been about a year since October of last year.
Afterwards, at 11:12 pm on the same day, the yen strengthened rapidly without warning. At 11:13, just one minute, the yen’s weakness suddenly calmed down to 147.30 yen per dollar.
According to Nikkei, the yen price usually does not move by about 3 yen in one minute. Accordingly, speculation was raised that the Japanese government may have intervened by purchasing yen and selling dollars.
Analyst Moya analyzed that the Japanese government intervened at this time. When the US employment report for September is released on the 6th of this month, the prevailing view is that the dollar will strengthen and the yen will weaken further, so he pointed out that “the Japanese government may have made a move (in advance).”
He said that the interest rate gap between the U.S. and Japan is continuing to widen and predicted that “the yen could weaken and the dollar could strengthen to 1 dollar = 155 yen within 2 to 3 weeks.”
In addition, analyst Moya said that there is a possibility that Japan will intervene in the exchange rate market two to three more times in the future.
On the other hand, there are also predictions that the value of the yen will rise moderately in the future.
Masahiro Ichikawa, chief strategist at Sumitomo Mitsui DS Asset Management, analyzed that the yen is “likely to trend in the 150 yen range for the time being, but the yen may move to 148 yen by the end of the year.”
He said the U.S. Federal Reserve is expected to raise interest rates in November, but expects inflation to slow thereafter. Accordingly, the calculation is that if US interest rates fall, dollar buying will also decline.
Strategist Ichikawa said, “I don’t think the price will calm down to around 1 dollar = 146 yen by the end of March next year.”
Yujiro Goto, chief exchange rate strategist at Nomura Securities, predicted that the value of the yen would rise further.
He predicted that the U.S. Federal Reserve’s interest rate cuts will begin next year. He presented a blueprint that the value of the yen would strengthen as the interest rate gap between the U.S. and Japan narrowed.
Strategist Goto predicted, “For the time being, 1 dollar = the high 140 yen to 150 yen range, but there is a high possibility that it will move in the direction of the yen’s strength to the 130 yen range next year.”
As of 10:07 a.m. on the 5th, the yen is trading at 148.56 to 148.58 yen per dollar in the Tokyo foreign exchange market.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.