Authorities may initially be targeting ¥150 as the level for correcting yen depreciation, with the possibility of subsequently aiming to bring the exchange rate back to ¥130–140.
Regarding the target level for correcting yen depreciation, some observers have pointed to the possibility that the authorities intend to share a certain target level and advance efforts to prevent and correct further yen depreciation. There is recognition that changing the USD/JPY level is important to dispel the current bias toward yen depreciation.
On the path toward yen appreciation to ¥150, one view proposes that long-term interest rates would need to fall to 2%. However, some observers have also pointed out that the feasibility of this is limited because it would depend on a shift in the Takaichi administration's fiscal policy.
If concerns over fiscal discipline are dispelled and the divergence in the US-Japan interest-rate differential is corrected, some observers believe that ¥130–140 could become a realistic level for correcting yen depreciation.
Given the impact of structural changes in the past, yen appreciation to ¥120 is considered highly unlikely, and correction to ¥130–140 may be viewed as the realistic range.