Pimco bets on the yen and starts buying itJapanCentral bankDue to rising inflation, we will be forced to tighten monetary policy.
Pimco fund manager Emmanuel Sharef said he started building a long yen position a few months ago after the yen fell below 140 yen against the dollar.
“As Japan’s inflation rises and remains above their target, they may want to concede defeat or change direction,” Scherff told Bloomberg in an interview last week.YieldCurve control policies may ultimately require interest rate increases. ,
“US inflation is falling, while Japanese inflation remains high. A natural long yen position within our framework.”
The value of the yen has fallen more than 12% against the dollar this year. However, in recent months economists have begun to push the Bank of Japan’s program to normalize policy.
The yen fell to 151.91 yen against the US dollar last week, just one step away from hitting a 30-year low in October 2022, making it the worst-performing G-10 currency this year. Although the Bank of Japan has eased its control over the yield curve, it has not stopped the yen from weakening. The yen fell 0.1% to 149.79 against the US dollar today (Monday).
“I can’t predict exactly how they’ll do it, but some type of strictness will be necessary,” Shareff said. “Rates may also increase.”
Another possible way to support the yen could be further intervention by the authorities. Authorities began buying yen in October last year after the yen fell below 150 yen per dollar.
“I think they are under a lot of pressure, especially around JPY 150. Last time they got to this level they were forced to intervene. They haven’t done as much this time,” Sheref said. But I’m sure they care.”