Yen’s True Value Could Offer Support Once BOJ Pivots, BofA Says
- Bank’s models show USD/JPY’s fair value about 49% stronger
- Dollar remains overvalued against all Group-of-10 peers: BofA
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The yen’s fair value could offer support if Japan’s central bank joins the hawkish global wave or the US economy dips close to a recession -- should valuations be any guide, according to an analysis by Bank of America.
The Japanese currency, which is trading near a 24-year low versus the greenback, stands out for how far its wandered from fair value in fundamental-based Behavioral Equilibrium Exchange Rate models, said strategist Myria Kyriacou in a Friday note. While the dollar-yen trades at 135.25, the firm estimates its equilibrium should be about 49% stronger at 90.74.