'Mr. Yen' says Japan’s currency may fall to 160 and beyond

TOKYO, Jul 07 (Bloomberg) - The yen may fall through the more-than three-decade low it reached last year amid Japan’s widening monetary policy divergence with the US, according to Eisuke Sakakibara.

Known as "Mr. Yen" for his ability to influence the currency when he was Japan's vice finance minister from 1997-1999, Sakakibara said the yen may weaken more than 10% from current levels as the Bank of Japan clings to ultra-easy policy while the Federal Reserve raises interest rates to tame inflation. The yen strengthened to about 143.6 per dollar on Friday in Tokyo.

"It might even go beyond 160, maybe next year," the current president of the Institute for Indian Economic Studies said in Tokyo. At around the 160 per dollar level, authorities "may be tempted to intervene to strengthen the yen."

Shorting Japan's currency has made a comeback among investors as falling Treasuries spur investors to sell the yen in favor of the higher-yielding dollar. The yen is one of the worst-performing Group-of-10 currencies this year after tumbling almost 9% against the greenback, jolting officials into resuming verbal intervention to slow the yen's descent and warning of firmer action. ...continue reading