The yen will slump to 120 per dollar in six months as the Federal Reserve raises U.S. interest rates but that’s about as weak as it will get, former International Monetary Fund Economist Stephen Jen says.
The currency will rebound to 100 by early 2018 as the Bank of Japan’s policies of controlling yields and adding stimulus through bond purchases reach a limit, said Jen, chief executive officer at hedge fund Eurizon SLJ Capital Ltd. in London. The central bank already holds more than 40 percent of local government bonds on issue, up from 14 percent before it started an expanded debt-purchase program in April 2013.
“The BOJ is closer to the limits of their unconventional monetary policy than any other central bank,” Jen said in an interview last week. Once all its options are exhausted, the yen will return to its fair value of around 90 per dollar, he said.
Posted on the 23/02/2017 at 9:31am by joana.