Economists at Westpac expect the USD/JPY pair to decline over the coming months.
Japan’s strong relationship with the US and Europe, combined with their technological and industrial capabilities offer considerable opportunity for economic growth in both the short and long-term.
It is yet to be seen if domestic price pressures can sustain inflation above 2.0% in the medium term. Under such conditions, the interest rate differential between Japan and the world is likely to principally depend on foreign interest rate movements, limiting gains in Yen.
On our forecasts, USD/JPY ends 2024 and 2025 at 138.00 and 127.00.