Morgan Stanley predicts that the weakness of the yen is not yet over, and it is expected to fall to 155 next year.

According to Dolphin Research, analysts predict that although the US dollar may not be as strong in the coming months as expected, its decline has not yet ended.

Tohru Sasaki, Head of Market Research at Longbridge Japan, stated in an interview that the USD/JPY may fall to 152 this year and to 155 by 2024. He believes that even if the Bank of Japan abandons its yield curve control policy this year, it will not bring much hope in the long run.

He was the most accurate forecaster in the USD/JPY exchange rate survey last quarter. He stated that the Bank of Japan still struggles to raise policy rates or reduce inflation, which is weakening the yen. The yen hit a 10-month low this week, prompting Japanese monetary policy official Masato Kanda to issue a warning. He stated on Wednesday that if the unstable trend continues, authorities are prepared to take action.

Having worked as a trader at the Bank of Japan and participated in foreign exchange interventions in the 1990s, he said, "The yen is likely to be one of the weakest currencies next year." "I'm not sure how we can get out of this situation," he said.

In early trading on Thursday in Tokyo, the USD/JPY was around 1 USD to 147.60 yen. In recent days, the index has approached 148, as strong economic data supported the argument for the Federal Reserve to maintain high policy rates, leading to a continued strengthening of the US dollar.

The forecast for the USD/JPY is higher than the median of surveyed analysts, who expect the yen to be at 140 against the US dollar in the fourth quarter and 129 next year. He recommends shorting major currencies, including the US dollar, and predicts that various yen cross-currency pairs will reach higher levels next year.

Due to the Bank of Japan's dovish stance while other central banks are raising interest rates, all currencies of the G10 countries have weakened this year. Since 2016, Japan's policy rate has remained at -0.1%, while the current policy rate in the United States is 5.5%.

"Japan's negative interest rate policy may remain at a relatively deep level for quite some time," he said. "Perhaps the Bank of Japan needs to raise policy rates without considering other negative impacts on the economy. But this would make Fumio Kishida's cabinet unpopular, so it is politically difficult."

He stated that the Japanese government may not intervene and buy until the exchange rate reaches 155, noting that it had already fallen below the level that prompted government intervention last year.

"With yen-buying interventions, they cannot fail. They need to use limited foreign exchange reserves." "So I don't think they will conduct yen-buying interventions so frequently."