Goldman Sachs boldly predicts: The Japanese Yen will rebound within ten years, shooting straight past the 100 mark!

Goldman Sachs strategists said that as Japan's monetary policy gradually normalizes, the yen may rise to the 100 level against the US dollar in the next 10 years, indicating a possible reversal of the long-standing trend of yen depreciation. The strategists, led by Kamakshya Trivedi, stated in a report released on Monday that considering the upcoming exit of ultra-loose policies like yield curve control, this forecast is "actually not as radical as it may seem on the surface." Since the Bank of Japan implemented a negative interest rate policy in 2016, the yen has been structurally weak, with the last time the dollar traded in the 100 range against the yen. The weakness of the yen has not only triggered capital outflows and promoted popular arbitrage trades, but also supported Japanese export companies and boosted the domestic stock market. Both the Nikkei 225 and TOPIX indices are currently hovering near historic highs. The Goldman Sachs team pointed out that based on historical experience, even if the yen exchange rate deviates from fair value for a long period of time, it will eventually gradually return to its fair value. This trend was particularly evident from 2020 to early 2021: at that time, due to the rise in global risk aversion and the decline in US Treasury yields, the yen temporarily strengthened before returning to a depreciation channel. Although Japanese Prime Minister Naoto Kan's support for loose policies and his fiscal expansion plan are seen as negative factors that could suppress the yen exchange rate in the short term, strategists believe that considering the increasing political opposition to inflation in Japan, even if policies return to the "Abenomics" model, the intensity will be "much more moderate."