Citigroup Sees USDJPY Falling Below ¥155 by Year-End
C•Citigroup’s valuation framework using 2017–2025 data pegs fair value for USDJPY at ¥161 per dollar, with a shorter‐term 2023–2025 model estimating ¥159. The bank forecasts the yen to strengthen and the exchange rate to fall below ¥155 by year-end, citing limited dollar upside and potential BOJ intervention.
1. USDJPY Forecast and Year-End Target
Citigroup forecasts USDJPY to drop below ¥155 by the end of the year, citing limited scope for further dollar gains and a narrowing interest-rate gap. The bank acknowledges that positive investor sentiment could continue to weigh on the yen in the short term but expects a correction lower during the second half.
2. Valuation Framework Details
The firm’s long-term model using 2017–2025 data estimates a fair value for USDJPY at ¥161 per dollar, while a shorter-term model covering 2023–2025 yields ¥159. Both approaches indicate that current exchange levels are broadly balanced between interest-rate differentials and equity-market strength.
3. Implications for FX Trading and Intervention
Citigroup highlights that policy normalization by the Bank of Japan may not suffice to prevent periodic yen weakness if global risk appetite remains strong, suggesting that Japanese authorities could continue intervening with yen purchases. This stance may influence FX trading strategies and risk management decisions within currency markets.
