Breaking News: Citi Updates Forecast for USD/JPY Pair, Predicts Potential Weakness Ahead
Citi, one of the leading financial institutions, has recently updated its forecast for the USD/JPY pair, offering valuable insights into the trajectory of the currency pair for the medium-term and long-term. According to Citi's strategists, the recent depreciation of the yen is mainly driven by Japan's digital account deficit, but they argue that the narrative of structural yen weakness is a "fallacy."
In the medium-term, Citi suggests that the yen could weaken further, potentially pushing the USD/JPY towards 150 by the end of 2024. However, looking ahead to early 2025, the pair could dip below 140 and continue on a downward path to close near 130 by the end of the year.
Citi points out that there are factors that could reverse the recent yen weakness, such as the potential repatriation of foreign earnings by Japanese corporations and improvements in Japan's current account balance. These factors could provide upward pressure on the yen and strengthen the currency over time.
Despite these potential positives, Citi remains cautious about the yen's near-term outlook, citing significant influences like portfolio investments and broader financial balances that could continue to impact USD/JPY fluctuations. The bank also warns that the pair remains sensitive to marginal changes in market conditions and flows.
Analysis: This forecast from Citi suggests that the USD/JPY pair could experience weakness in the coming years, with the potential for the yen to depreciate against the dollar. This could have implications for investors and individuals with exposure to these currencies, as it may impact their investment portfolios and purchasing power. It is important for individuals to stay informed about these forecasts and consider their own financial strategies in light of this information.