Huan Qiu Wang·2025-12-27 01:07Core Viewpoint - The outlook for the Japanese yen is increasingly pessimistic, with major global investment banks predicting a potential depreciation to 160 yen per dollar or lower by next year due to various economic pressures [1][3]. Group 1: Economic Factors Impacting the Yen - The Bank of Japan's slow interest rate hikes, ongoing capital outflows, and inflation risks driven by fiscal policies are seen as core factors suppressing the yen [3][4]. - Despite a nearly 10% decline in the US dollar index this year, the yen has only slightly rebounded by 0.5%, indicating its weakness [3]. - Market expectations suggest that the next interest rate hike by the Bank of Japan may not be fully priced in until September next year, adding to the uncertainty surrounding the yen [4]. Group 2: Predictions from Analysts - Analysts from JPMorgan and BNP Paribas expect the yen to weaken further, with JPMorgan's Junya Tanase predicting a target of 164 yen per dollar by the end of 2026 [3][5]. - BNP Paribas's Parisha Saimbi anticipates that the macro environment will favor risk appetite, leading to a forecast of 160 yen per dollar by the end of 2026 [4]. Group 3: Capital Outflows and Market Sentiment - There is a notable trend of Japanese retail investors favoring overseas assets, with net purchases through investment trusts at near ten-year highs, which may continue until 2026 [4]. - Corporate capital outflows are also significant, with Japanese companies engaging in high levels of foreign acquisitions this year [4]. - The sentiment in the market remains tense, with speculative pressures on the yen leading to concerns about potential government intervention to stabilize the currency [5].