Yen's Struggle Continues Amid Fading Intervention Hopes
The Japanese Yen continues to struggle against the US Dollar, despite some recent gains. The USD/JPY has bounced back above 159.00 after hitting lows near 158.00 last week.
Experts agree that a significant Yen recovery will require more than just intervention from the Bank of Japan. In fact, strategists at Societe Generale argue that economic growth is key to unlocking a sustainable yen rally.
'I suspect that what is really needed to kick-start a sustainable yen rally is an upgrade to Japanese forecasts, more than anything to do with differentials,' said a strategist at Societe Generale.
The current consensus for Japan's economic growth remains low, with average growth expected to be 0.75% this year and next. This is lower than before the Gulf conflict pushed up oil prices.
FX analysts at BNY Mellon also highlight concerns about Japan's fiscal balance, noting that foreign investors have stepped up sales of Japanese Government Bonds. Net outflows of ¥1.25tn were seen last week, cutting YTD foreign net purchases to ¥4.99tn, the lowest cumulative level since early February.