The yen against the dollar fell below the 140 mark in the New York exchange market on Thursday (1st), the first time in 24 years. Some Japanese financial industry experts believe that before the end of this year, the yen against the dollar may fall below 145.
The “Nihon Keizai Shimbun” reported on Friday (2nd) that Yuji Saito, foreign exchange minister of Credit Agricole Bank, said that the trend of depreciation of the yen and appreciation of the dollar will continue this fall, and the US Federal Reserve (Fed) executives are many. It is mentioned that the monetary policy should be tightened, and the interest rate may even exceed 4%, and the effect is also reflected in the foreign exchange market one after another.
Saito Yuji believes that before 2022 ends, the yen may fall to around 145 against the dollar.
The US mid-term election is about to be held in November. In order to curb inflation, the sentiment of giving priority to raising interest rates remains, and the trend of the dollar exchange rate is likely to rise. The trade deficit is also a heavy pressure on the yen. Importing companies bought dollars because of actual demand, which is one of the main reasons for the depreciation of the yen. Even if crude oil prices fall, Japan’s trade balance should take some time to turn a profit.
In addition, Yuji Saito reminded that it is necessary to pay attention to the geopolitical risks in the Taiwan Strait, because many countries believe that if there is turmoil in the Taiwan Strait, Japan may be involved. Combining various factors, he believes that the situation of selling the yen will continue.
Yamamoto Masafumi, chief foreign exchange strategist at Mizuho Securities, pointed out that the US Federal Reserve (Fed) regards curbing inflation as its top priority, and it is expected that the Federal Reserve will continue to raise interest rates, and may raise interest rates by 3 yards (75 basis points) in September. With the target rate likely to hit about 4% by the end of the year, dollar buying could intensify this year, with the yen likely to hit 142 against the dollar.
Daisaku Ueno, chief foreign exchange strategist at Mitsubishi UFJ Morgan Stanley Securities, said that the financial policies of Japan and the United States are significantly different. Federal Reserve Chairman Powell has a negative attitude towards interest rate cuts next year, while the Bank of Japan intends to continue to maintain an ultra-loose monetary policy. .
This means that after the Swiss National Bank and others implement interest rate hikes, among the world’s major currencies, the yen may be the only currency that maintains negative interest rates in the future. Also because there is no interest, the incentive to buy the yen is weak. The yen is likely to depreciate further, with the yen likely to fall below 144 against the dollar before 2022 ends.