Core Viewpoint - The market's concerns over Japan's significant increase in government spending and the resurgence of inflation are leading to a breakdown in the traditional correlation between the yen and the dollar, prompting HSBC strategists to revise their forecasts for the yen's trajectory in the coming months [1] Group 1: Economic Factors - Two catalysts for the "sudden revaluation" of the yen are identified: the substantial rise in Japanese inflation that began in 2022 and the ascension of Prime Minister Kishi Matsumoto in October [1] - HSBC now predicts that the yen will fall to 160 yen per dollar by mid-year, contrary to previous expectations of strengthening to 150 yen [1] Group 2: Market Dynamics - The complexity of the situation is highlighted by the potential for Japanese authorities to intervene in the foreign exchange market if the yen falls below 160 [1] - Several potential factors that could halt the yen's recent decline are noted, with the most feasible being an economic slowdown in the United States, which is beyond the control of Japanese policymakers [1]