The yen is on a roll.
After starting the year around 120 per dollar, the currency surged as high as 107.63 early on Monday to its strongest level since October 2014, when the central bank unexpectedly boosted QE.
But the yen may still have room to advance further this year, argues the man nicknamed “Mr. Yen” for his ability to influence the exchange rate in the 1990s.
Eisuke Sakakibara, the former Finance Ministry official in charge of currency intervention in Japan who is referred to as Mr. Yen, said in an interview with Bloomberg that the currency may appreciate to 105 in the next few months, and could get to 100 by the year-end.
A yen at 105 per dollar is “no problem” for Japan’s economy, he argued, adding that any currency intervention can only be done with agreement from the US and other counter parties.
However, not everyone shares Sakakibara’s
bullish outlook. According to the median of forecasts compiled by Bloomberg, analysts expect the yen to weaken to 118 this year.
Still, for what it’s worth, Sakakibara correctly predicted the yen’s current rally earlier this year.
And last month, he argued in an interview with Bloomberg that, “the yen’s appreciation isn’t the result of monetary policy or because Japan’s recovery is strong, [but because] the world economy has become very disorderly.”
“The problems in the Chinese economy won’t be so easy to sort out, and global growth is stagnating. In that environment, the yen will necessarily strengthen. We’re in the first phase of that now,” he added.
The yen has remained strong despite various comments from Japanese officials.
On Monday, Bank of Japan Governor Haruhiko Kuroda reiterated his readiness to expand monetary policy further, adding that the central bank will keep a watch on market moves. Plus, last Friday, Japanese Finance Minister Taro Aso warned that rapid currency moves last week were “one-sided movements,” and suggested that Japan “will take necessary steps” if needed.
The yen is at 108.12 as of 8:56 a.m. ET.