BOJ Hawkishness Key to Yen Rebound, Says BlackRock's Rieder
BlackRock's Rick Rieder believes that Japan's yen will only strengthen if the Bank of Japan (BOJ) sends hawkish signals through monetary policy. The BOJ has kept its benchmark rate at 1%, while the Federal Reserve's target range is between 3.5% and 3.75%. This interest-rate differential has favored the dollar, making it difficult for intervention to boost the yen.
Rieder stated that 'you need to really keep going with a lot of firepower' in terms of foreign-exchange intervention, but 'you've got to get monetary policy to a place that people believe you're going to raise the rate.' He expects another increase from the BOJ by September or October at the latest.
The yen has been inching back toward 160 per dollar this week, nearing its cheapest level in four decades. The government is supportive of a near-term hike by the central bank, and traders anticipate a Fed rate increase by year-end.