John Taylor, who works as the Chief Executive Officer of FX Concepts LLC, believes that the Yen is going to decline to 130 per USD within the next couple of years as the foreign investment in the Japanese bonds wanes amidst a climbing rate of inflation. It is still not pretty clear what sort of monetary policy the Government will undertake after it achieves the current goal of 2% inflation. Incidentally, Taylor is also the founder of FX Concepts LLC, which is a renowned Currency Hedge Fund. According to Taylor, at one point of time, American and European investors will show hesitation before buying the 10-year Government bonds, thereby leaving this Asian country to rely on domestic demand only. Incidentally, last time in 2002, Yen traded at 130 per USD.
Taylor added further that the Japanese Government still needs to borrow and if the 10-year interest rates of Japan go up, the financial situation of the Japanese Government is almost certain to get ruined. Incidentally, the major currency of Japan, Yen experienced a surge of 0.2% on today and it is currently priced at 98.83 per USD. At one point of time, it jumped up to 98.58 per USD, marking its best figure since the last 7 days. When it comes to Euro, Yen declined by 0.6% and it is currently priced at 130.23 per Euro.
Taylor believes that Yen may take time till August to weaken below the level of 100 per USD. Incidentally, such low value of Yen is unseen after 2009. According to Taylor, the global economy may experience a dip in the 3rd quarter of 2013 and if something like that happens it will do well to Japan and strengthening of the Yen.
Yen has weakened by 12% in 2013 as the monetary policy of the country aims at reaching 2% inflation in the next couple of years. Yen’s decline in 2013 is the most if all the major currencies are taken into account.
Incidentally, on 19th April, the finance chiefs and central banks met and they praised the measurements taken by the Bank of Japan for boosting the economic growth. The Bank of Japan has maintained a pledge for doubling the monetary base; however, it is yet to outline any additional measures for meeting the inflation target on a statement made on 26th April.