USD/JPY in the spotlight. Currency intervention is not a permanent solution, analysts emphasize
The dollar-to-yen exchange rate in the coming months will approach the level of 165 JPY, analysts at Goldman Sachs said.
They believe that the weakening of the Japanese currency, and consequently the rise in the USD/JPY rate, will be due in part to the persistent interest rate differentials between Japan and the United States.
The team raised its forecast from 155 JPY to 165 JPY, placing itself among the most pessimistic participants in a survey conducted by the agency Bloomberg.
The yen’s rate is currently hovering near its lowest levels since 1986, strengthening its position among the weakest major currencies over the past 12 months.
We wrote more about this in the article: The dollar rate is approaching a key level. It hasn’t been seen in 40 years!
The market fears that the current situation may prompt the Bank of Japan to make one or several currency interventions.
“Investors who recall the 1980s realize how much the dollar has fallen against the yen, and that even a partial reversal of this trend brings the pair back into a higher range of fluctuations,” said Mark Cranfield, Markets Live Bloomberg strategist.
Goldman Sachs forecasts that the dollar-to-yen rate will reach 162 JPY in three months and 163 JPY over six months.
Earlier it was expected that in the same period the USD/JPY pair would reach 160 JPY and 158 JPY respectively.
Economists predict that the effectiveness of interventions aimed at supporting the yen will likely be short‑term.
“Recent reports that the Ministry of Finance may stop issuing warnings before official operations begin could again temporarily reduce rate volatility, but the underlying causes of the yen’s weakness remain unchanged,” emphasized Goldman Research economist Karen Reichgott Fishman.
Read also: Will the dollar force a series of currency interventions? The bank warns there is more than one, and several.
Chart. Interest rate path in the United States and Japan
Source: Trading Economics.
Read also: The dollar on a long road to 4 PLN? The expert issued forecasts for USD/PLN and EUR/USD. “The dollar could gain.”
See also: Will the dollar still surprise? The expert issued a forecast for USD/PLN and EUR/USD. “It’s hard for me to believe there won’t be more fires.”
Dollar rate to yen on Monday, July 6
The dollar-to-yen rate on Monday, July 6 is at 162,3 JPY (+0.62%).
Read also: The dollar worries analysts. “The risk of further intervention remains high” – they warn.
Chart. Dollar rate to Japanese yen (USD/JPY)
Source: Trading Economics.
Read also: Dollar before the chance to break out? Expert: “Capital will flow back to USD.”
See also: Dollar before a “nervous and dynamic” move, euro waiting for a drop? Expert issued forecast for USD/PLN and EUR/USD.
Source: Bloomberg.
