Investors are betting the yen may rise as much as another 10% after the Bank of Japan¡¯s unexpected policy shift fueled speculation it is finally abandoning its ultradovish monetary settings.
The currency may appreciate to ?120 per dollar or stronger due to its inexpensive valuations, according to Generali Investments, while Union Investment Privatfonds predicts a short-run gain to about ?125. Societe Generale forecasts the BOJ decision will trigger a hedging wave from overseas funds that may propel the currency higher over the next month.
The yen surged as much as 4.8% on Tuesday after the BOJ blindsided the market by raising its cap on 10-year bond yields to 0.5% from 0.25%. The rally came after the currency had already risen from a more than three-decade low in October as the market trimmed bets on Federal Reserve interest-rate hikes.
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