The Yen's Slump is Over, Says Top Forecaster
This year's most accurate yen forecaster says that the worst of the yen's slump is over, even though Tokyo is almost 5,000 miles away.
This year's most accurate yen forecaster says that the worst of the yen's slump is behind it. The forecaster is based almost 5,000 miles from Tokyo, which gives him a unique perspective on the currency. His prediction is that the yen will continue to weaken in the short term, but will eventually recover.
It is unlikely that the dollar-yen exchange rate will break out of its current range, as market expectations for US interest rates have already climbed to around 4.5%. This is according to Joseph Capurso, head of international economics at Commonwealth Bank of Australia in Sydney. However, CBA's more optimistic view is at odds with that of other banks such as Morgan Stanley, who see the Japanese currency continuing to slide against the dollar, reaching 150 per dollar.
The yen is expected to remain strong against the US dollar in the near future, according to currency analyst Mario Capurso. This is due to the fact that the US Federal Reserve is not expected to keep interest rates high for an extended period of time. Capurso, who has over a decade of experience covering the yen and the US economy, believes that this will help support the currency's value.
The yen is set to weaken next year as the Federal Reserve cuts interest rates, according to one analyst. This will likely bring the dollar-yen exchange rate down as investors seek out the yen as a safe-haven currency. The Fed's interest rate cuts are a sign that there are problems in the world economy, and this will likely weigh on the yen in the coming months.
CBA is currently forecasting that the yen will end the year at 137 per dollar, but is in the process of finalizing its latest forecasts. This is a significant change from the bank's previous forecast of 120 per dollar, and indicates that CBA is confident that the yen will continue to strengthen against the dollar in the coming months.
As the global economy teeters on the brink of recession, Japan's currency has taken a beating. The yen has tumbled more than 20% against the dollar this year, prompting the government to intervene and support the currency for the first time since 1998. With global recession jitters rising, there has been no haven bid for the yen, and it is trading near its weakest level since the Asian Financial Crisis.
I predict that the Japanese government will continue to intervene in the currency markets in order to prop up the value of the yen. This will have the effect of making Japanese exports more expensive, and could ultimately lead to a trade war with other nations.
Capurso has been the top-ranked yen forecaster each quarter this year, according to data compiled by Bloomberg, based on criteria such as margin of error, timing and directional accuracy. This is an impressive feat, and Capurso is clearly a expert in the field. I'm excited to see where Capurso's forecasting skills take him in the future.
It is clear that Mr. Stevens is highly experienced in the field of economics and finance, and his appointment as head of Japanese economic and currency research at Commonwealth Bank is a testament to this. He is clearly very knowledgeable about the Japanese economy and is very bullish on the nation's prospects, expecting that Japan will raise rates in the future. His focus on the nation's current accounts is also very insightful, and I believe that his advice will be invaluable to the bank and its clients.
It is a lesson that Japan learned after recording a shock deficit about a decade ago. The feeling then was that the yen was going to weaken, and it did subsequently. Capurso said that this is a lesson that can be applied to the current situation.
Looking back on that moment, it's clear to see that the yen was always going to be a difficult currency to trade. If we had known then what we know now, we would have been much more bearish on the yen.
As Japan's current account balance continues to fluctuate between a deficit and small surplus, the country's economy remains vulnerable to external shocks. While the most recent monthly data from the Ministry of Finance shows some improvement, it is clear that more needs to be done to ensure Japan's long-term economic stability.
Capurso's forecast may not have been perfect, but it has been better than other analysts. CBA expected the currency to be trading at 136 per dollar at the end of September, while the consensus estimate was for 129 per dollar. However, the yen actually closed just under 145 per dollar on September 30. Despite this, Capurso's forecast is still considered to be more accurate than others in the field.
This goes to show you just how rapidly and how much the yen moved. Capurso said that they were a fair bit off, but this just illustrates how volatile the currency can be.