Goldman Sachs has adopted a more pessimistic view on the Japanese yen, forecasting a decline in its value against the U.S. dollar, with projections of 162 yen per dollar in three months, 163 in six months, and 165 in twelve months. This shift comes as the yen recently reached its lowest level against the dollar in 40 years.
The bank attributes this trend to a combination of persistent high U.S. yields, low recession risks, and gradual interest rate hikes by the Bank of Japan (BoJ). Goldman notes that past interventions by Japanese authorities have only provided temporary relief, and without a significant negative shock to U.S. growth or a more aggressive stance from the BoJ, the yen's decline is expected to continue.
Additionally, Goldman sees the dollar remaining strong due to ongoing investments in artificial intelligence and energy supply disruptions.
The bank has also adjusted its euro forecasts downward and expressed optimism for certain emerging-market currencies, such as the Indian rupee and Colombia's peso, suggesting that investors may increasingly use the yen to finance investments in higher-yielding markets