According to former Japanese Ministry of Finance's Deputy Minister for International Affairs, Sakahara, the yen may fall further to 170 against the US dollar next year, that is, it will fall by about 15% from the current level. The exchange rate has fallen by 30% this year.
Kashihara British Capital said he expects the yen to depreciate further as it hovers around its lowest level in 32 years. In the late 1990s, he worked hard to influence the yen exchange rate through verbal and official intervention, so he was called "Mr. Japanese Yen".
Later last week, there were reports that Japanese officials intervened again. Sakahara British capital said in a comment: "Most business people now expect the yen to depreciate further, and 170 is in the range."
According to foreign media reports, Japanese officials recently publicly confirmed that they had taken direct action to defend the yen in September, when they reportedly spent a record 2.8 trillion yen (US$19.7 billion) to prevent the yen from falling sharply. The yen continued to weaken further, breaking the key psychological threshold of 150 in one month. As British capital made the above predictions for the yen, Japanese officials remained on whether they would publicly confirm that they would intervene for a second time to defend the yen.
After the media reported the action, the yen strengthened sharply against the US dollar to about 146. Last week, the yen fell below the 150-day level against the US dollar, setting the lowest level since in August 1990.
If the news is confirmed, it will be the second such intervention by the Bank of Japan after officials confirmed at the end of September that it had taken action to defend the yen. At the end of September, the yen hit a level of about 145 against the US dollar.
Kashihara British capital added that he expects the Bank of Japan to start hiking interest rates under continuous inflationary pressure "later next year" - once the term of the central bank governor Haruhiko Kuroda ends in April 2023.
He said: "After the Bank of Japan's government change, if the Japanese economy overheated, then their monetary policy may shift from loose to tightening. I expect to tighten the policy later next year." He added that this policy shift could occur in the form of one or two rate hikes.
He said: "It depends on the economic situation next year. As expected, if the economy overheated, it is very likely that the Bank of Japan may raise interest rates."
Since this year, many mainstream central banks around the world have chosen to follow the tightening of monetary policies, but the Bank of Japan is one of the outliers. After years of stagnation in inflation, the Bank of Japan insists that the current inflation pressure is temporary and insists on maintaining monetary easing.
The next monetary policy meeting of the Bank of Japan is scheduled to be held on Friday (October 28), and most market participants expect the Bank of Japan's loose monetary policy will not change. According to 25 of the 28 economists surveyed by the media, 25 said the Bank of Japan may maintain its current position until the second half of 2023.
Against the backdrop of intensifying monetary policy differences between the Bank of Japan and the Bank of Japan, the yen has experienced a plunge this year. The yen has fallen by nearly 30% year-on-year to date.
USD vs. Japanese yen daily chart
Beijing time on October 26, 13:58, USD vs. Japanese yen at 148.12/13.
