The Bank of Japan may be powerless to prevent the yen from rising to a 13-year high, according to the world's biggest foreign-exchange traders.
Deutsche Bank AG, UBS AG and Barclays PLC predict the yen will recover from its steepest weekly decline since 1999 as investors reduce carry trades that fund purchases of higher-yielding assets by borrowing in Japan. The currency will appreciate to ¥90 per dollar from ¥98.02 Thursday in Tokyo even if the BOJ intervenes to stem the biggest annual gain since 1998, they said.
"Once the market realizes that we're now in a global recession, there's further deleveraging to come," said Geoff Kendrick, a senior currency strategist in London at UBS, the second-biggest trader in the $3.2 trillion-a-day market. Traders "are capitulating" after five years of bets against the yen, he said in a Nov. 4 interview.