In February, the Yen weakened versus the US Dollar from 130.08 to 136.15. But the underperformance of the Yen in February is unlikely to become sustained, in the opinion of economists at MUFG Bank.

Yields globally are close to peaking, which points to JPY recovery

“The underperformance of the Yen in February is unlikely to become sustained and we maintain that the inflation angst that has emerged globally will not return to anything like during period of last year when JPY depreciated sharply.”

“Since the Dollar peaked at the end of September, JPY has been 2nd best performing G10 currency to end-January. Some retracement in that context is understandable. But we maintain inflation will subside from here and yields globally are close to peaking which points to JPY recovery, especially with BoJ policy set to change as well.”

“USD/JPY – Q1 2023 136.00 Q2 2023 133.00 Q3 2023 130.00 Q4 2023 127.00”