Credit Agricole Cuts USD/JPY Forecast, Sees Repatriation Supporting the Yen

Credit Agricole has lowered its forecast for the USD/JPY exchange rate to 156 in Q4 2026 and 150 in Q4 2027, citing potential repatriation of Japan's Government Pension Investment Fund (GPIF) as a supporting factor for the Yen.

The bank believes that if GPIF shifts its asset allocations towards domestic assets, it could lead to significant repatriation flows of $115.0-$138.1 billion, resulting in a short-term fair value for USD/JPY between 148-150.

Credit Agricole expects labour shortages to support wage growth and further Bank of Japan (BoJ) tightening, while US data and energy markets remain more immediate drivers for the Yen.