In the view of economists at Wells Fargo, the Japanese yen still has potential to weaken against the US dollar in the medium-term. The USD/JPY pair is forecast at 149 by the first quarter of 2023.
Yen to strengthen heading into late 2023
“The increasing divergence in monetary policy between a hawkish Federal Reserve and dovish Bank of Japan means we believe the yen still has room to weaken against the US dollar in the medium term, even if the Ministry of Finance intervenes in FX markets again to support the currency.”
“We believe that as yields continue to diverge, the yen can weaken toward a USD/JPY exchange rate of 149.00 by Q1-2023, before recovering somewhat as next year progresses.”