Ex-BOJ Governor Kuroda Sees Yen Rally Toward 120-130 Per Dollar

Former Bank of Japan Governor Haruhiko Kuroda said that the yen is likely to strengthen to around 120 to 130 to the dollar, as the interest rate gap between Japan and the US is expected to narrow sooner or later."The current yen-dollar exchange rate, which is 153 yen to the dollar or something like that — that is too weak," Kuroda told Bloomberg TV on Thursday in the sidelines of the Barclays Asia Forum in Singapore. "At some stage the yen-dollar rate would recover toward 120 or 130 yen to the dollar," he said.

The yen was trading around 152.80 to the greenback around 2 p.m. in Tokyo Thursday.

Kuroda added that US rate cuts and the BOJ's move in the opposite direction will naturally narrow the rate differential between the two economies, helping the yen return to levels last seen over two years ago.Kuroda's comments came about half an hour before the BOJ announced its decision to keep interest rates steady, as widely expected. Kuroda, who passed the governorship to academic Kazuo Ueda in 2023, introduced the central bank's ultra-easy monetary policy in 2013 and helmed a period of unprecedented policy. After a decade of massive easing in which the BOJ bought up assets including bonds, stocks and real estate funds, and held rates in negative territory for years, it was largely left to Ueda to begin normalizing policy.

Before becoming BOJ governor Kuroda was at one point Japan's chief currency official, in charge of the Finance Ministry's decisions to intervene in foreign exchange markets."The 2% inflation target was already met and the economy is growing 1.5% or something like that. And the unemployment rate is only 2.6% or something," Kuroda said, suggesting conditions are in place for Ueda's BOJ to continue with its rate hikes.The former governor noted that the central bank's decision to pause normalization over the past five meetings reflected a desire to monitor the impact of US President Donald Trump's tariffs on Japan's economy. The impact, Kuroda said, turned out to be less than previously expected.

"I'm not quite sure whether they'll move today or not. But anyway, they may move today or next meeting in December," Kuroda said, suggesting he thinks there's a high likelihood of a hike at the end of the year.

Source: Bloomberg Europe