Nomura forecasts yen’s growth by 6% as Japanese investors exit US assets

Analysts at Nomura Holdings, Inc. predict that the Japanese yen could strengthen by approximately 6% against the US dollar in the coming months, driven by Japanese investors pulling funds from American assets amid rising yen yields. Another contributing factor is Washington's pressure on Tokyo during ongoing trade negotiations.

Japan’s largest investment bank now recommends selling the dollar against the yen, targeting 136 yen by the end of September (compared to the current 144 yen). Nomura analysts expect the Bank of Japan’s steady rate hikes to "prompt domestic investors to increase their allocation to local bonds over foreign ones," as stated in their Friday client report.

In a semiannual currency report released Thursday, the US Treasury urged Japan’s central bank to continue raising interest rates. The Treasury noted that tighter monetary policy would help "normalize the yen’s weakness against the dollar" and support "a much-needed structural rebalancing of bilateral trade."