HSBC strategist sees no miracle cure for the yen
- Adam German
- Jul 24
- 2 min read
HSBC’s Daragh Maher explains why Bank of Japan rate hikes may do little to strengthen the yen, even as inflation keeps pressure on policymakers to act.
Speaking on Bloomberg Surveillance on July 23, he also outlined what would need to go wrong in the US economy for the dollar to weaken and why higher European Central Bank rates may not be enough to support the euro.
Key points:
Maher is deeply skeptical that Bank of Japan policy alone can generate sustained yen strength.
He explains why the BOJ may raise rates without delivering the stronger yen many investors expect.
After decades of fighting deflation, Japan’s central bank now faces an inflation environment it has little experience managing.
Maher uses a striking analogy to describe why the BOJ may be uncomfortable with the very inflation it once worked so hard to create.
A Japanese rate hike would need to exceed market expectations—and outpace policy shifts in the US, Europe and UK—to materially change the yen’s direction.
The dollar remains difficult to dislodge while it offers investors both relatively high yields and safe-haven appeal.
Maher argues that meaningful dollar weakness may require genuinely bad US economic data, particularly a clear deterioration in the labor market.
He also explains why a more hawkish ECB may not necessarily strengthen the euro if higher rates arrive alongside weak growth and renewed stagflation risks.
Fiscal policy and tax incentives encouraging Japanese investors to keep more capital at home may ultimately matter more for the yen than another BOJ rate increase.
Watch the full discussion for Maher’s outlook on the yen, dollar, euro and the growing distinction between “good” and “bad” interest-rate hikes.
