Former Japan FX "Chief": Yen May Be Undervalued by 20%, Bears Still Need to Watch for Intervention Risk

Odaily Planet Daily News – Tatsuo Yamasaki, former Vice Minister of Finance for International Affairs and Japan's former top forex official, said in an interview on Monday that the yen should strengthen by as much as 20% from current levels (to around 130 yen per dollar), pushing back against views that the yen could weaken further.

"This is no longer about fundamentals, but about how market expectations change. But we are approaching a climax," Yamasaki said. He believes current estimates that the yen is undervalued by 10% may be conservative. "I wouldn't be surprised if the yen rises to around 130. Honestly, that's my view."

Meanwhile, Yamasaki suggested the market should not mistake the recent apparent calm of Japanese authorities for complacency. "They have issued warnings, and anyone still holding yen short positions knows they risk being punished by intervention – that is, being forced to unwind their positions," he said. "The Ministry of Finance has gone beyond the warning stage; authorities have shown they are willing to act." (Jinshi)