Tokyo (Reuters) -In a Reuters poll, nearly two-thirds of currency strategists said the Japanese yen’s rise against the US dollar since mid-July is only temporary.This is true even though uncertainty about the global economy has slowed the U.S. dollar’s rally.
Just three weeks ago, the yen was down as much as 17.5% against the dollar for the year and hit a 24-year low of 139.38 per dollar. Then, in two weeks, it went up 6.9% to 130.40 and settled above that level.
It was last traded at around $134, which means that it is still down about 14% for the year.
In a poll of 28 global currency analysts conducted from August 1 to 3, 17 of them, or 61%, said that the recent strength of the yen against the dollar would not last.
Analysts said it was unlikely that the yen would rise in the short term because the Bank of Japan (BOJ) stuck to its ultra-easy monetary policy, which made it different from other central banks around the world.
“The yen will stay weak as long as the BOJ keeps its YCC (yield-curve control) policy,” said Tony Nyman of Informa Global Markets, referring to the central bank’s plan to keep the yield on 10-year Japanese government bonds (JGBs) at 0.25 percent.
The rise in U.S. Treasury yields this year has put upward pressure on benchmark 10-year JGB yields. This made the BOJ panic and buy a lot of bonds to protect its de facto yield cap, which made the yen fall.
The BOJ has strongly denied rumours that the YCC framework could be changed to allow benchmark yields to go up. This could take some pressure off the yen.
Even strategists who say the recent rise in the value of the yen is not a short-term trend think the change will be slow.
“It could take some time for USD/JPY to start going down,” said Jane Foley, head of FX strategy at Rabobank. She predicted that the yen would strengthen to 128 per dollar in the next 12 months.
The median prediction of the 54 currency experts polled is that the yen will trade at 134.00 per dollar in three months. This is a weaker prediction than July’s 133.00.
The median prediction was that the USD/JPY rate would be 131.33 in six months, which was not much different from July’s rate of 131.00.
Twelve of the 52 people polled thought the yen would fall to 135 or less per dollar by the end of January, while only four thought it would rise to 125 or more.
(For more news from the Reuters foreign exchange poll in August:
