Goldman Sachs Cuts Its Yen Forecasts
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Goldman Sachs Group Inc. ( GS ) has cut its forecasts for the Japanese yen against the dollar based on the aggressive policy easing by the Bank of Japan and a pickup in the U.S. economy.
In a note dated Wednesday, the bank said that it now sees the dollar trading at Y102 on a three-month horizon and at Y105 in six and 12 months. It said its near-term forecast had previously been Y95 against the yen, but didn't give further details of its old forecasts. Early Thursday in Europe, the dollar was hovering just below Y100.
"A more aggressive policy easing than anticipated by the market would make additional yen weakness likely. As this has happened, we now revise our near-term forecasts," the bank said in a note.
It added that the new stance of the Bank of Japan makes it likely that Japanese rates will remain at zero until long after the Federal Reserve has started to raise interest rates. The difference between U.S. and Japanese interest rates has traditionally been an important driver of the dollar-yen exchange rate.
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