Headline: Yen Could Revisit 160 per Dollar as BOJ Tightening Fails to Stem Slide, Economist Warns
Key Takeaways
The Japanese yen faces renewed downside risk, with a leading economist cautioning that USD/JPY could return to the 160 level even if the Bank of Japan tightens policy further. He argues the recent depreciation looks increasingly driven by speculative flows, strengthening the case for fresh foreign exchange intervention by Tokyo.
Koichi Fujishiro, chief economist at Dai-ichi Life Research Institute, noted that the yen’s weakness has persisted despite a narrowing interest-rate gap between Japan and the United States over the past year. That disconnect suggests additional BOJ rate hikes may have limited impact on currency support. In his view, the market’s behavior has taken on a speculative character, giving authorities a clear rationale should they choose to step in.
Fujishiro said the probability of FX intervention is rising, and that a large, dollar-selling operation could meaningfully shift positioning. Such a move may deter speculative sellers and stabilize the yen for a month or two. Japan’s last intervention came in July 2024, when authorities deployed roughly ¥5.5 trillion over two days as the currency approached ¥162—its weakest level since 1986—pushing it back toward the ¥157 range, with firmness extending into October.
He downplayed near-term inflation risks, pointing to cheaper crude oil—now below $60 a barrel—as a counterweight to import-cost pressures typically associated with a weaker currency. That dynamic, he suggested, helps explain why policymakers have not signaled acute concern about yen depreciation despite the recent slide.
Key Points: – Economist warns USD/JPY could revisit 160 even with further BOJ rate hikes – Yen weakness persists despite a narrowing Japan–U.S. rate differential – Market move seen as increasingly speculative, bolstering intervention case – Large dollar-selling intervention could stabilize the yen for 1–2 months – Japan last intervened in July 2024 with about ¥5.5 trillion, moving yen from near ¥162 to around ¥157 – Lower oil prices near $60 help temper inflation pressures from a weaker yen
