The yen may drop to 130 to the dollar before paring losses, according to John Taylor, founder and chief executive officer of the currency hedge fund FX Concepts LLC.
Unprecedented stimulus measures announced by the Bank of Japan under Governor Haruhiko Kuroda on April 4 will continue to devalue the currency for the next few months, New York-based Taylor said in an interview on Bloomberg Television’s “Market Makers” with Erik Schatzker and Sara Eisen. The yen will probably stabilize and strengthen back to parity with the dollar by September, Taylor said.
“They are trying to weaken it,” Taylor said. “It might not happen for two or three months, but I think the yen is going to get to be very weak -- 125 or 130.”
The yen appreciated 0.6 percent to 97.80 per dollar at 1:36 p.m. in New York. The currency sank to 99.95 per dollar on April 11. It last traded at 100 per dollar in April 2009.
Gold’s decline to the lowest in more than two years is “close” to offering a buying opportunity, Taylor said. He predicted gold will stabilize between $1,250 an ounce and $1,400 and that the metal is attractive at $1,300. Gold futures for June delivery tumbled as much as 9.7 percent today to $1,355.30 an ounce.
“The governments are very much involved,” Taylor said. “They don’t want deflation.”
The BOJ said this month it would double monthly bond buying to 7.5 trillion yen ($76 billion), while suspending a cap on holdings and ending a three-year maturity limit on purchases. The government’s goal of 2 percent inflation is achievable in two years, Kuroda said.