Former Japanese Forex "Chief": Yen May Be Undervalued by 20%, Short Sellers Should Still Beware of Intervention Risk

Odaily Odaily reported on Monday that Tatsuo Yamazaki, a former Vice Minister of Finance for International Affairs and Japan's top currency official, stated in an interview that the yen should appreciate by up to 20% (to around 130 yen per dollar) from its current level, pushing back against views betting the yen could weaken further.

Yamazaki said, "This is no longer a matter of fundamentals, but one of how market expectations shift. Yet we are approaching a climax." He believes that current estimates of the yen being undervalued by 10% may be conservative. "I wouldn't be surprised if the yen rises to around 130. To be honest, that's my view," he added.

Meanwhile, Yamazaki suggested that the market should not misinterpret the recent apparent calm from Japanese authorities as complacency. "They have issued warnings, and anyone still holding short yen positions knows they face the risk of being punished by intervention – that is, forced to unwind their positions," he stated. "The Ministry of Finance has moved beyond the warning stage, and authorities have shown they are willing to act." (Jin Shi)