Barclays sees yen retreating toward upper 150s
The yen could surrender part of its sharp September advance and move back towards the upper 150s per dollar if expectations for faster Bank of Japan tightening and large-scale pension-fund repatriation fail to materialise, Barclays has warned. The caution comes after the Japanese currency surged to its strongest levels since February, helped by mounting conviction that the central bank will lift…
Barclays warns that the Japanese yen could retreat back towards the upper 150s against the dollar if expectations for increased tightening by the Bank of Japan and significant pension-fund repatriation do not materialize. The yen surged to its strongest levels since February, driven by hopes of a September rate hike and speculation of foreign investors shifting assets overseas.
However, Barclays argues that the recent appreciation is based on expectations rather than a genuine shift in capital flows or monetary policy, making the currency vulnerable if those expectations prove unfounded. The market's expectation of a quarter-point rate increase to 1.25% has also contributed to the yen's rise. Meanwhile, Japanese pension funds and other large institutions are expected to direct more capital toward domestic bonds and equities, potentially boosting the yen.
However, the actual repatriation remains uncertain, as the GPIF's portfolio still contains a significant portion of foreign assets.
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