Goldman Sachs: "US Inflation Shock May Push Yen-Dollar Close to 155 Yen"

(Photo by Bloomberg)

[Asia Economy Reporter Yujin Cho] Goldman Sachs has forecasted that the yen-dollar exchange rate could approach around 155 yen due to the impact of the U.S. consumer price shock.

According to major foreign media on the 14th (local time), Goldman Sachs stated that the Federal Reserve (Fed) is almost certain to raise the benchmark interest rate further due to the U.S. price shock impact, and U.S. Treasury yields are also expected to rise, making it difficult for the yen to escape its weak trend.

Earlier, the U.S. Department of Labor announced that the Consumer Price Index (CPI) for August rose 8.3% compared to the same month last year, exceeding market expectations of 8.0%. The core CPI, which excludes volatile food and energy prices, also rose 6.3% year-on-year and 0.6% month-on-month, surpassing market forecasts as well.

Goldman Sachs’ foreign exchange strategist Karen Reichgott Fishman said in an investment note, "The trajectory of the yen-dollar exchange rate will largely depend on where the U.S. 10-year Treasury yield heads." She predicted that if the U.S. 10-year Treasury yield rises from the current 3% range to 4.5%, the yen-dollar exchange rate will surge 7% and approach 155 yen.

She added, "Considering that the Japanese Ministry of Finance is intensifying verbal intervention regarding exchange rate movements and that the Bank of Japan reportedly conducted a 'rate check,' which is considered a preparatory step for foreign exchange market intervention, according to Nihon Keizai, the probability is increasing."

The previous day, the yen-dollar exchange rate surged intraday to 144.9 yen, nearing 145 yen. In response, Japanese Finance Minister Shunichi Suzuki indicated the possibility of foreign exchange market intervention, stating that all means would be used against yen weakness.

Japan’s yen has not escaped its weak trend amid a widening policy interest rate gap with other major central banks such as the U.S. and a record-high trade deficit.

According to the August trade balance announced by the Japanese Finance Ministry on the same day, exports increased 22.1% year-on-year to 8.0619 trillion yen (approximately 78.5 trillion won), while imports surged 49.9% to 10.8792 trillion yen (approximately 106 trillion won).

As a result, the trade deficit was recorded at 2.8173 trillion yen. This deficit is double the record high of 1.4068 trillion yen recorded last month for July.

This content was produced with the assistance of AI translation services.