Japanese yen has depreciated sharply against the US dollar. Economists at Westpac expect the JPY to regain some ground and forecast the USD/JPY pair at 132 by the end of next year.

USD/JPY is likely to hold above its pre-pandemic levels

“As risk appetite returns and investors look for growth opportunities across the world, it seems inevitable that we will see a material retracement of recent yen weakness. However, even as major central banks cut policy rates from end-2023, USD/JPY is likely to hold above its pre-pandemic levels with a wide interest rate and inflation differential to persist.” 

“We look for USD/JPY to fall to 132 end-2023 and 128 mid-2024.”