Japan Analysts See Rebound For Yen In 2023

The yen is set to gain ground in 2023 in a sharp turnaround from a plunge to a 32-year low against the US dollar, keeping Tokyo stocks subdued coupled with a gloomy global economic outlook, Kyodo News reported.

Photo Insert: The yen is expected to rise toward 120 yen against the dollar from its current levels of around 133 yen, driven by the narrowing gap between Japanese and US long-term bond yields.

The Japanese currency is expected to rise toward 120 yen against the dollar from its current levels of around 133 yen, driven by the narrowing gap between Japanese and US long-term bond yields, market analysts say.

The outlook contrasts starkly with the currency's drop of more than 30 percent from around 115 yen at the beginning of 2022 to the year's low near 152 yen in October, a level not seen since 1990.

The yen's strength will dim earnings outlooks for Toyota Motor Corp., Sony Group Corp. and other major Japanese exporters and could pull the benchmark Nikkei 225 index down to 25,000, analysts say.

A stronger yen trims profits earned overseas when repatriated and undermines the price competitiveness of Japan-made products abroad.

The index ended Friday, the final trading day of 2022, at 26,094.50, marking a 9.4 percent drop from the beginning of the year and the first yearly fall in four years. Aggressive monetary tightening by the US Federal Reserve has sent the dollar sharply higher against the yen in tandem with rising US Treasury yields.

"But this is going to change dramatically next year," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities, referring to the expected yen's rebound against the greenback.

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