Goldman Sachs has revised its 12‑month forecast for the Japanese yen to 165 yen per U.S. dollar, down from its prior estimate, according to a Bloomberg‑cited report on the Forex Factory forum. The bank said the move reflects a “carry‑trade” environment in which investors borrow low‑cost yen to invest in higher‑yielding assets abroad.
The yen has been under pressure amid concerns over Japan’s sovereign debt profile and a series of market interventions that analysts described as “doomed to fail.” The currency is hovering near 40‑year lows against the dollar, with the U.S. currency edging higher ahead of the Institute for Supply Management (ISM) services data release.
Former Japanese finance ministry official, often referred to as the “currency czar,” told CNBC that the yen may be undervalued by as much as 20 percent, suggesting a potential for a rebound if market sentiment shifts. However, Bloomberg reported that the yen continued its slide as the dollar gained modestly.
Goldman’s outlook signals confidence that the current interest‑rate differential between Japan and other major economies will sustain the yen’s depreciation, making it attractive for carry‑trade strategies. The firm did not provide a specific timeline for a potential reversal.
Analysis:
Goldman’s downgrade aligns with broader market sentiment that Japan’s fiscal challenges and the Bank of Japan’s ultra‑easy policy limit the yen’s upside potential in the near term. By emphasizing carry trades, the bank is effectively betting on continued rate differentials, which could keep the yen weak unless the Bank of Japan pivots or Japan’s debt concerns are mitigated. Critics argue that persistent interventions by Japanese authorities have failed to stabilize the currency, raising questions about the effectiveness of policy tools in a high‑debt environment.
Sources
– “Goldman Cuts Yen Forecast to 165 Per US Dollar, Likes Carry Trades – Forex Factory.” Google News India – Business, https://news.google.com/rss/articles/CBMiiAFBVV95cUxQRkVSX3lsVjdvd3M4QkJfSW5TdGt1aXlkZEdRQVF3N19DWGtDOGl0M3V6M2M5NW9IYnFOMVZMQWFiMDZ4a29WLUZnRVpTSFpzVlAtcXdsSzUydVdON0g4a1VuWktwOXItVEFPZ3draVhlaU4wQmpScGNCSi1GXzVBalljQTRZYVB10gGOAUFVX3lxTE5FeUU0czFPUkdxT0xPWWFGNTVUbUx3b0daeWMxZ1Q1ZkRNMmQ3Mkc4MHVGX29xM2d2b1BDaG9GQUhSU2FuZkdBbGhmcXc3R1ljZ3hrRnRSUVFyRTZmRi03OTV6eGtRYm1iQk1CNGFwS1VPTmN1SXQyVDNkSUtfaU01dXRNRTJrQjVVTUxxQmc?oc=5.
Story synopsis gathered from: Google News India – Business — source
Corrections
If you believe this article contains an error, contact Herald Express with the source URL and supporting evidence.
