The yen’s slide is seen continuing even as Japanese officials ramp up intervention rhetoric, according to UBS Group AG strategists, who see the dollar-yen pair reaching 175 by year-end in an “extended disruption” scenario.
If oil prices were to rise toward $150 a barrel, “using FX intervention to try to control inflation could potentially be a case of providing the market a higher level at which to sell JPY, at the expense of running down FX reserves without necessarily changing the trajectory,” strategists including Shahab Jalinoos said in a note published Wednesday. Efforts to curb inflation may instead rely more on fiscal measures such as energy subsidies, they added.