Commerzbank Warns Yen at Risk of Sliding to 160 per Dollar

Commerzbank strategists have warned that the Japanese yen could weaken back toward 160 per US dollar, revisiting multi-decade lows seen in 2024.

The forecast is based on persistent interest rate differentials between the US and Japan, as well as the Bank of Japan's cautious policy stance.

The core driver of the yen's weakness remains the wide gap between US and Japanese interest rates. While the Federal Reserve has signaled potential rate cuts, the pace is expected to be gradual, keeping US yields relatively attractive.

Meanwhile, the Bank of Japan has maintained its ultra-loose monetary policy, with Governor Kazuo Ueda emphasizing the need for sustained inflation before any significant tightening.