Yen May Drop to 115 by Year-End on Taper, Commerzbank Says

The yen will decline to 115 per dollar by the end of the year amid mounting speculation the U.S. Federal Reserve will slow monthly asset purchases, according to Peter Kinsella of Commerzbank AG.

“We’re going to see the yen trade at a very weak basis in the coming years,” Kinsella, a senior currency strategist at Commerzbank in London, said in an interview on Bloomberg Radio’s “The First Word” with Bob Moon.

Fed Chairman Ben S. Bernanke called yesterday for maintaining accommodation even as the minutes of policy makers’ June meeting showed the central bank still debating whether to stop bond buying in 2013. Many members of the Federal Open Market Committee are looking for further improvement in the U.S. labor market, according to the minutes.

Japan’s currency appreciated 0.8 percent to 98.92 per dollar in New York after climbing to 98.27, its strongest level in two weeks. The median year-end estimate in a Bloomberg survey of economists and analysts is 105.

The yen depreciated 0.1 percent to 129.47 per euro today after gaining earlier to 128.65.

“The outlook from here is going to be data-dependent,” Kinsella said. “What we’re going to get at the next Fed meeting is a little bit more clarity regarding what they’re going to do. We’re going to see the tapering probably between September and December of this year.”

The yen weakened beyond the 100-per-dollar threshold this year for the first time since 2009 as Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda implemented an unprecedented bond-buying program to help combat years of deflation. Japan’s monetary policy, aimed at reaching 2 percent inflation in two years, has weakened the yen 12.5 percent in 2013, the second-most out of 31 major currencies tracked by Bloomberg.

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