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Japan’s yen, which hit a one-month low against the U.S. dollar on Thursday, could plunge at least 14 percent by the end of the year as investors exit Japanese government bonds, according to Ed Ponsi, Managing Director of Barchetta Capital Management.
The yen weakened as low as 79.34 per U.S dollar on Thursday as investors pushed the dollar higher on a scaling back of expectations for U.S. monetary easing.
Ponsi said that Japan’s currency could weaken to 90 against the dollar by end of the year, in a move that could take the yen to levels not seen since June 2010.
Japanese government bond yields are looking relatively less attractive compared to their U.S. peers and this is likely to encourage investors to sell the yen and move funds back to the higher-yielding assets, Ponsi said, added that the yen could be a “huge loser.”
“I think you’re seeing a big differential, a big spread is beginning to take place between Japanese and U.S. 10-year and 2-year (government bonds). And what that’s doing is, it’s starting to pull money out of Japan and into the U.S.,” Ponsi told CNBC Asia’s “Squawk Box” on Thursday. “I think the dollar-yen is going to be in the low 80s very soon, and it could be in the 90s by year end.”
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