Yenas looks to rebound in 2023, according to analysts

A hawkish U.S. Federal ReserveFederal Reserve and dovish Bank of Japan look poised for an impressive turnaround in 2023, as the world's worst performing major currency looks poised for a turnaround in 2023, according to its two key drivers.

According to Barclays and Nomura Holdings, the yen could rally more than 7% from current levels next year, while Vontobel Asset Management said fair value is below 100 per dollar, which is a favored short against the dollar for a majority of the year. State Street Global Markets sees a quick bounce back as a result of the U.S. interest rate hikes recede, while T. Rowe Price said there was scope for gains on a more hawkish BOJ.

Sebastien Page, head of global multiasset at T. Rowe, said we are about to reach peak yen weakness. When the Fed pauses on hiking, there is room for the Bank of Japan to surprise the market by being a bit more aggressive in policy and boost the currency.

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