RBC revises its USD/JPY forecasts higher to 160, citing persistent energy import costs and domestic investor reluctance to repatriate funds amidst JGB market volatility.
Key Takeaways
- 1.RBC has revised USD/JPY forecasts significantly higher, targeting 160 by December 2026 compared to a previous forecast of 147.
- 2.High energy costs and a potential Brent price of $110 are dragging the Yen into a structural trade deficit.
- 3.Domestic Japanese investors are not reshoring capital due to increased JGB volatility from BoJ quantitative tightening and fiscal risks under the Takaichi government.
Table of Contents
- Exposed to higher energy costs
- Local investors are not reshoring
- BoJ QT is a loss of demand for JGBs
- Fiscal concerns weigh on JPY
- Intervention will only be temporarily successful
- What could lead JPY to strengthen?
- Disclaimer
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Authors
Abbas Keshvani
Securities
USDJPYJGBBrent Crude
Themes
Monetary Policy NormalizationEnergy-Driven Inflation/Trade DeficitFiscal Risk in Developed Markets
Regions
Asia PacificJapanUnited States