Yen Retreats to 1990 Levels
The Japanese yen has been on a steady decline since the Bank of Japan (BOJ) adopted a dovish stance in its monetary policy. Goldman Sachs Group Inc. has predicted that the yen will continue to weaken and eventually reach levels not seen since the early 1990s.
BOJ’s Dovish Stance
The BOJ has been keeping its monetary policy loose since the global financial crisis of 2008. It has kept its benchmark interest rate at -0.1%, and has been buying government bonds and other assets to keep the economy afloat. This has resulted in a weaker yen, as investors have been selling the currency in favor of higher-yielding assets.
Goldman Sachs’ Prediction
Goldman Sachs has predicted that the yen will continue to weaken and eventually reach levels not seen since the early 1990s. The bank believes that the BOJ will maintain its dovish stance, and that the yen will eventually reach a level of around 120 to the US dollar. This would be a significant drop from its current level of around 105.
Impact on Japanese Economy
The weakening of the yen has had a positive effect on the Japanese economy. A weaker yen makes Japanese exports more competitive, and has helped to boost the country’s economic growth. It has also helped to reduce the cost of imports, which has been beneficial for consumers.
Risks of Weakening Yen
However, there are also risks associated with a weakening yen. A weaker currency can lead to higher inflation, as imported goods become more expensive. This can lead to higher interest rates, which can have a negative effect on economic growth.
Outlook for Yen
Overall, the outlook for the yen is uncertain. Goldman Sachs’ prediction of a further weakening of the currency is based on the assumption that the BOJ will maintain its dovish stance. If the BOJ were to change its stance and tighten monetary policy, then the yen could strengthen.
Conclusion
The Japanese yen has been on a steady decline since the Bank of Japan adopted a dovish stance in its monetary policy. Goldman Sachs Group Inc. has predicted that the yen will continue to weaken and eventually reach levels not seen since the early 1990s. The weakening of the yen has had a positive effect on the Japanese economy, but there are also risks associated with a weakening currency. The outlook for the yen is uncertain, and will depend on the BOJ’s future monetary policy decisions.