Goldman Sachs Turns Bearish on Yen, Sees 165 Per Dollar

Goldman Sachs (NYSE: GS) has turned more bearish on the Japanese yen, revising its forecast to 165 yen per dollar. The bank warns that any intervention by Japanese authorities to support the currency will likely be short-lived.

Forecast Revision

The new forecast represents a significant depreciation from previous expectations, though specific prior levels were not disclosed in the report.

Analyst Rationale

Goldman Sachs analysts cite the persistent interest rate differential between Japan and the US as the primary driver. The Bank of Japan's accommodative policy contrasts with the Federal Reserve's tightening, keeping pressure on the yen. Any intervention is seen as temporary and limited in effect.

Context

The yen has been under heavy pressure this year, touching multi-decade lows. Japan has intervened in the currency market several times, but with limited lasting impact. Other major banks, including Morgan Stanley, have also adjusted their yen forecasts downward, though with varying degrees of bearishness.

Takeaway

Goldman's revised forecast underscores a bearish outlook for the yen in the near to medium term, driven by interest rate differentials. Investors may consider short yen positions, but should watch for potential intervention.