Morgan Stanley Private Banking: The Bank of Japan may raise interest rates again this year, and the yen may appreciate structurally.

Morgan Stanley Private Bank global market strategist Tang Yuxuan pointed out that due to the slow progress in US-Japan negotiations and the uncertainty of tariffs, the Bank of Japan is expected to remain patient in adjusting its policy interest rate. She noted that the current USD against JPY is still below the bottom line set by the Bank of Japan, and the escalation of the situation in the Middle East may push up energy prices, putting pressure on the Japanese economy that relies heavily on oil imports. However, she still believes that the Bank of Japan may raise interest rates again before the end of this year. She believes that the outcome of this week's Federal Reserve meeting will influence the direction of the Bank of Japan's decision-making. If the Federal Reserve maintains a "wait-and-see" stance until the end of the year, the Bank of Japan may face greater pressure to raise interest rates. In terms of foreign exchange, she expects the yen to show a structural appreciation trend, but the appreciation trend will be gradual. Due to the high negative interest rate of holding the yen, the bank does not recommend speculatively long yen positions. However, she agrees that holding a moderate long yen position can serve as a hedge against macroeconomic downside risks and improve portfolio hedging capabilities.