The yen has the potential to drop to levels last seen in 1990 on Japan¡¯s deepening monetary policy divergence with the United States, former Finance Ministry official Eisuke Sakakibara has said.
Nicknamed ¡°Mr. Yen¡± for his ability to influence the currency during his tenure as Japan¡¯s vice finance minister from 1997 to 1999, Sakakibara said the contrast between a hawkish Federal Reserve and the Bank of Japan¡¯s loose monetary policy remains the single biggest driver of the yen¡¯s weakness. Until that gap narrows, the yen is likely to remain under pressure against the world¡¯s reserve currency.
¡°Market expectation is that toward the end of the year, it will go between ?140 and ?150 ¡ª so it is quite possible that the yen would reach that level,¡± Sakakibara, now a professor at Tokyo¡¯s Aoyama Gakuin University, said in an interview with Bloomberg Television. ¡°If it goes beyond ?150, then I think the Bank of Japan would be somewhat concerned.¡±
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