RBC Capital Markets: Yen Unlikely to Recover Before Next Year

RBC Capital Markets said the Japanese yen was unlikely to recover before next year, citing the Bank of Japan’s pace of quantitative tightening. According to Jin10, RBC Capital Markets analyst Abbas Keshvani wrote in a report that the yen was unlikely to rebound before the Bank of Japan slows its quantitative tightening. Keshvani said the central bank’s plan to slow quantitative tightening starting in April 2027 should help stabilize Japanese government bonds. He noted that Japanese bonds offer yields that are higher than alternatives after foreign-exchange hedging. He added that if a slower pace of quantitative tightening leads bond yields to stabilize and eases investor concerns about potential losses, domestic investors may have an incentive to shift toward yen-denominated assets. RBC expects the U.S. dollar to fall to 154 yen by the end of 2027.