UBS Asset Management Sees Yen Interventions as Selling Opportunities, Warns USD/JPY May Extend Gains

UBS Asset Management's Kevin Zhao said any renewed Japanese intervention to support the yen would be a good opportunity to sell the currency, arguing that neither further Bank of Japan rate hikes nor government action will convince investors the yen can sustain a rally. Zhao, global head of sovereign and currency fixed income, sold his long-yen position after the U.S. and Japan jointly bought yen in July 2024, when the currency slid to about 164 per dollar, a 40-year low. He is now waiting to sell again. The BOJ raised rates on Friday and declared a "new phase" in monetary policy, but the yen's rebound has been limited and it is again approaching 164. Japanese authorities have since conducted rate checks with market participants, typically a precursor to intervention. Zhao said Japan's underlying weak-yen policy is unchanged, with Prime Minister Sanae Takaichi continuing Abenomics-style fiscal support. Even if the Fed hikes as many as three times by June 2027, he said, the interest-rate gap may not narrow meaningfully.