The yen's fall is far from being complete

Next year, the Japanese yen is expected to recover only a third of its value relative to the dollar. The cause will be the divergent policies of the hawkish US Federal Reserve (Fed) and the dovish Bank of Japan (BOJ). According to a Reuters poll, the gap between central banks continues to widen.

Policy divergence weakened the country's currency. The yen has lost a fifth of its original value this year. As a consequence, September saw authorities intervene in the currency market for the first time since 1998. The central bank of Japan spent 2.8 trillion yen during this process.

Despite the measures taken, the yen continues to fall, as Bank of Japan Governor Haruhiko Kuroda adheres to the loose monetary policy. And this trend is likely to persist in the near-term.

"Chances for the reversal of the USD/JPY uptrend not taking place, are high, as its support is provided by the policy divergence of the USA and Japan, along with the balance of payments deficit. That said, the market intervention was one-sided," noted Shusuke Yamada, currency strategist at Bank of America.

"The Bank of Japan's commitment to maintain an ultra-soft monetary policy through yield curve regulation sent a strong message to sell the yen," mentioned Derek Halpenny, head of research at MUFG.