The Barclays Research economists expect USDJPY to turn to the 130 level over the course of 2023 due to two reasons.
The Fed will start cutting rates from September 2023
“In the medium term, we expect USDJPY to reverse its recovery towards 130 in 2023 due to the tightening of the monetary policy divergence and the improvement of the current account.”
“We expect the Fed to start cutting rates from September 2023 after keeping its target range at 5.00-5.25% for six months, which will cause US-Japan policy rate spreads to tighten. Our baseline assumption is no change in BoJ policy until 2024but the risk may be an earlier move if domestic wage/inflation dynamics improve, global growth holds up, or fears arise about the limits of FX intervention.”
“Declining global commodity prices (especially oil and food) and the reopening of Japan’s borders to foreign tourism should start to reverse the negative terms-of-trade impact on the current account in 2022. The Limited unhedged investment appetite, as well as moderating outward M&A flows by corporates, suggest currency supply-demand will tilt in JPY’s favor in 2023.”
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
