On December 17th, Bloomberg reported a potential shift in the yen's trajectory after three years of significant declines.
According to a Bloomberg poll, market experts anticipate a yen rally in 2024. This forecast stems from the expected departure of Japan's negative interest rate policy as the Bank of Japan (BOJ) aligns with a global trend of reducing borrowing costs.
The yen's anticipated rise contrasts with previous misjudged projections due to factors like speculation about the BOJ's monetary policy. However, current expectations are more aligned with the imminent change in BOJ policy leadership and public discussions regarding policy adjustments.
The outlook factors in the Federal Reserve's anticipated interest rate cuts, signaling a potential narrowing of the interest rate gap between the US and Japan, causing the yen to strengthen.
Forecasts suggest the yen could reach around 135 against the dollar by the end of 2024.
While opinions differ, many experts predict a strengthening yen in 2024, influenced by potential shifts in central bank policies, economic trends, and global market dynamics.
Below are a summary of those opinions per Bloomberg:
Yujiro Goto (Nomura Securities): Predicts potential rate cuts by the Fed and ECB may bolster yen's rise; recession could drive dollar-yen to 130-135, limited to 140 in a soft landing.
Takeshi Yokouchi (Sumitomo Mitsui DS Asset Management): Expects major central bank rate changes and BOJ policy shift may pressure dollar-yen; foresees limited decline due to Japan's recovery strength.
Hiroyuki Machida (ANZ): Forecasts dollar weakening from lower US yields; even without BOJ tightening, yen could rise based on US monetary policy direction.
Kensuke Niihara (State Street Global Advisors): Dollar supported by high yields, economy; any shift may impact yen most, potentially pressuring yen appreciation in 2024.
Kenta Tadaide (Daiwa Securities): Fed’s borrowing cost cuts in 2024 could lower dollar-yen below 130; soft landing might maintain yen-selling, keeping it above 140.
Teppei Ino (MUFG Bank): Expects US election sentiment to favor growth, leading to potential Fed cuts; BOJ likely to normalize policy in January.
Big Currency Flop of 2023 Is Top Pick for Year Ahead, Again (Bloomberg; paywalled)