Yen Bulls See Turning Point After Biggest Annual Drop Since 2014
- Japanese currency tends to strengthen from beginning of hikes
- Tourism, BOJ speculation among firmer yen risks later in 2022
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The decline in the yen, which recorded its biggest annual slump against the dollar in seven years, may be nearing an end if the history of Federal Reserve rate increases is any guide.
The Japanese currency has shown a recent tendency to strengthen at the beginning of Fed hiking cycles -- in a “buy the rumor, sell the fact” manner -- sometimes bringing an extended period of weakness to an end. The yen fell more than 10% against the dollar in 2021 as traders positioned for the U.S. central bank to raise interest rates as soon as May while the Bank of Japan stands pat.