The yen is at risk of sliding to levels last seen in 1986, with bearish traders unmoved by the specter of government intervention to support Japan’s embattled currency.
According to Sumitomo Mitsui DS Asset Management and Mizuho Bank, a decline to ¥170 per dollar – around ¥10 from current levels – is possible due to continued selling of the currency in favor of the higher-yielding dollar.
Investors currently see few catalysts, including potential purchases of the yen by Japan, that would be powerful enough to reverse the momentum that has sent the yen down nearly 12% this year. Market moves since early May underscore this point, with the yen essentially back where it started after a record ¥9.8 trillion ($61.4 billion) entry into the market.
