The days of 100-to-1 parity between the yen and dollar are unlikely to come back anytime soon, according to most economists. While predictions are far from a guarantee when it comes to world economies, Japanese and U.S. government policies are likely to keep the yen relatively weak.
Kengo Suzuki, chief foreign exchange strategist at the Mizuho Securities, forecasts the yen will strengthen over the next few months into the 115 range before falling further.
In June, the U.S. Federal Reserve is expected to raise interest rates, while the Japanese will continue their weak yen policies as an economic stimulant, Suzuki said.
Suzuki expects those factors, along with a positive U.S. economic outlook, to sink the yen into the high 120s, and possibly the 130s, against the dollar.
Yuji Kameoka, chief foreign exchange analyst at Daiwa Securities, said the yen has only remained as strong as it is because of the global decline in oil prices.
“However, the drop in oil prices will not last long and the world economy will recover, making the yen … a weaker currency,” Kameoka said.
The Japanese government will pursue a weaker yen in order to sell more Japanese exports overseas, he said. Meanwhile, if the U.S. stock market continues its gains, demand for yen will drop, further weakening the currency.
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