The yen may rise toward a postwar record of 75 versus the dollar if the Federal Reserve goes ahead with easing policies that will further debase the greenback, according to Fukoku Capital Management Inc.
The yen touched 80.22 against the dollar today, the highest level since April 1995, when it set a postwar high of 79.75. The Fed starts a two-day meeting tomorrow where it may announce another round of asset purchases known as quantiative easing, and the Bank of Japan meets Nov. 4-5.
“The yen may keep strengthening against the dollar as long as the Fed carries out quantitative easing and there’s no sign that it will stop,” Yuuki Sakurai, who helps oversee the equivalent of $8.7 billion as chief executive officer and president at Fukoku Capital, said in an interview in Tokyo.
The U.S. will experience long-term economic stagnation though it will likely avoid a double-dip recession, Sakurai said. The yen will continue to strengthen as long as there’s room left for U.S. easing, and signs of an exit from Fed stimulus are unlikely to surface until the second half of next year, he said.
Estimates for a new round of asset purchases by the Fed range from $1 trillion at Bank of America-Merrill Lynch Global Research to $2 trillion at Goldman Sachs Group Inc. The Bank of Japan last week left unchanged its credit programs and benchmark interest rate, while it moved up the dates of its next meeting from Nov. 15-16.