The strategist who defied Japan's biggest investors to correctly predict the yen's weakness in 2016 is forecasting more losses for the currency in the new year.
The yen is set to slump to 125 against the dollar in 2017, with little chance of a sustained gain past 115, as the Federal Reserve's policy tightening widens the interest-rate differential between the U.S. and Japan, said Mansoor Mohi-uddin, a strategist at NatWest Markets, a unit of Royal Bank of Scotland Group PLC. The forecast shows Mohi-uddin, who previously estimated a trading range of 110 to 120 for the yen versus the greenback, has turned more bearish.
"The Bank of Japan is the one major central bank set to keep monetary policy super-loose this year," Singapore-based Mohi-uddin said in an interview Tuesday. "Dollar-yen is a popular trade already but shorting the yen is the purest play for a stronger dollar¥. The is likely to be the weakest major currency this year."