Traders are mapping out extreme scenarios for the yen, with some seeing a slide to 200 per dollar as a possibility if Japan's interest-rate gap with other major economies persists. T. Rowe Price views 169 per dollar as a potential worst case, Mizuho Bank draws the line at 170, and Sumitomo Mitsui Financial Group sees 180 in the coming years as one outcome. Calvin Yeoh of Blue Edge Advisors considers 200 and beyond within the realm of possibility by next December, while options markets assign a 15% chance of dollar-yen reaching 180 in a year and less than 1% for 200. The Bank of Japan raised its benchmark rate to 1% last month, but traders remain bearish amid concerns that the government wants the BOJ to go slow on further hikes and that the Federal Reserve may keep rates elevated. Japan's heavy debt burden, persistent budget deficits, and inflation from the Iran war are adding to structural yen weakness, with some investors warning of a disorderly depreciation if intervention proves ineffective.
Bank of Japan
Sumitomo Mitsui Financial Group, Inc.
Mizuho Financial Group, Inc.
T. Rowe Price Group Inc