Bank of America cut yen forecast.

Bank of America cut yen forecast.

Bank of America-Merrill Lynch claimed that by the end of March 2010 dollar will trade at the level of 85 yen while in the previous forecast they gave figure of 86 yen.

Such change is explained by new policy of Japan’s new Minister of Finance Naoto Kan who aims to stop over strengthening of national currency. Analysts of Bank of New York Mellon comment that Kan is known for criticizing Bank of Japan and the favorer of weak yen.

Lee Hardman, currency strategist at Bank of Tokyo-Mitsubishi, expressed opinion that the appointment of Kan would be negative for yen as the political and financial uncertainty in this case is likely to increase. Kan is expected to begin large export stimulation that implies low rate of currency.

Currently the pair is traded at 90.30. On the March 8 yen hit its low since February 23 at 90.68.

Japan’s new Minister of Finance claimed earlier that the government began to study attentively the moves of currency market after yen had renewed 14-month maximum of November 27 at 84.83 endangering country’s export. He also projected that yen could weaken versus euro as the sentiment about Greek budget issues improved.

This year yen advanced against euro by 8.8%. Currently single currency trades at ¥122.75. Bank of America-Merrill Lynch’s analysts expect ten to trade at the level of 117 yen against euro by the end of the month, while the previous forecast was 120 yen for euro. They expect to see EUR/JPY at 115 by the end of June.

Chart. Daily EUR/USD

Market news and analytics — FBS

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