A Japan-US interest rate difference of 4-4.5% is necessary to stop the yen from falling - Barclays

2024/6/20 23:06 JST

Photographer: Noriko Hayashi/Bloomberg

Barclays Securities strategists such as Mr. Shinichiro Kadota wrote in a report that the interest rate difference between Japan and the US, which could prevent the “excessive” depreciation of the yen, is 4-4.5 points.

　　The strategists pointed out that it is unlikely that this interest rate difference will be seen before April to June 2025 (second quarter). It was analyzed that one of the reasons why the depreciation of the yen is progressing more than suggested by domestic and international interest rate differences may be that this interest rate difference is too large.

　　The spread between the US Federal Fund (FF) interest rate and Japan's unsecured call next-day interest rate is 520 basis points (bp, 1 bp = 0.01%).

　　Strategists predicted that additional interest rate hikes by the Bank of Japan and the start of interest rate cuts by the US Federal Open Market Committee (FOMC) will be in the second half of this year.

　　The dollar/yen exchange rate is expected to move around 1 dollar = 160 yen by the end of the year.