Market divergence on the yen's outlook intensifies, former Japanese finance official says reasonable exchange rate should be at 130.

BlockBeats news, July 6 — As USD/JPY returns near 162, the market shows clear divergence on the yen's future trajectory. Tatsuo Yamasaki, former Vice Minister of Finance for International Affairs at Japan's Ministry of Finance, stated that the current yen exchange rate has clearly deviated from reasonable levels, and that around 130 yen per dollar is more in line with fundamentals, adding that he "would not be surprised" if the yen rose to that level.

At the same time, some market participants hold the opposite view. Monex Group Executive Director Jesper Koll and Blue Edge Advisors analyst Calvin Yeoh believe that if the Bank of Japan continues to lag behind in the process of normalizing monetary policy, USD/JPY could even rise to 200 or higher.

Yamasaki also warned that the Japanese government's recent lack of intervention in the foreign exchange market should not be interpreted as a lack of willingness to act. He said that Japan's finance authorities have issued multiple warnings and have proven their willingness to intervene, meaning yen bears still face the risk of being forced to unwind their positions. Market participants expect that the Japanese government may still choose to intervene in the exchange rate market around mid-July.