The global head of sovereign bonds and currencies at UBS Asset Management said another Japanese yen-buying intervention could create an opportunity to sell the yen. He said the BOJ's rate hike on the 18th did not signal a hawkish shift, adding that it remains unclear whether the yen's strengthening will continue.
According to comments by Kevin Zhao, global head of sovereign bonds and currencies at UBS Asset Management, as reported by Japanese media, another Japanese yen-buying intervention could create an opportunity to sell the yen. Zhao maintains that the BOJ's rate hike on the 18th did not signal a hawkish shift.
Zhao had previously been overweight the yen, but said he sold the currency during the large-scale coordinated yen-buying intervention by Japan and the United States in July and is waiting for the next catalyst. The market view remains that the Japan-US interest rate differential and expectations for Federal Reserve rate hikes will affect the yen.
The yen rose temporarily this month as expectations grew for a faster pace of BOJ rate hikes, but it has gradually weakened again, with little support following the rate hike on the 18th. Zhao said that "the fundamental policies contributing to yen weakness have not changed" and that the Japan-US interest rate differential is likely to be maintained as long as the United States continues to raise interest rates.
The market has priced in expectations for roughly 3 additional BOJ rate hikes by June, while the Federal Reserve is also expected to make a similar number of rate hikes, leaving the dollar-yen exchange rate under close watch. However, the article does not provide investment advice or a forecast of price movements.