BANGALORE: The flood of cash unleashed by the Bank of Japan to support a slowing economy will not weaken the yen much in the next year, a Reuters poll found on Friday.
The consensus view of more 60 currency strategists, conducted ahead of the last US jobs report before Tuesday's presidential election, showed the dollar will trade at 79.5 yen in both one and three months' time, and at 83.0 a year from now.
Those forecasts were roughly unchanged from a similar survey in October. Dollar/yen was trading around 80 earlier on Friday.
A strong yen does not favour an economy heavily reliant on exports and has prompted the BoJ to intervene directly in currency markets to stem its rise several times in the past two years.
"The problem for the BoJ is that they continue to fail to get ahead of the markets," said Jeremy Stretch, currency strategist at CIBC in London.
"The question mark is if they can get ahead of the market expectations. And, of course, we are still talking about an economy that is continuing to struggle overall and the market is biased in a risk-averse way."
Recent Japanese economic data, and most corporate earnings reports, have also been weak. Third-quarter gross domestic product, due on Nov. 11, is also likely to show contraction.
In its latest attempt to support the economy, the BoJ eased policy again this week, topping up its asset-buying programme by 11 trillion yen to 91 trillion and issued a joint pledge with the government to fight deflation.
For many years, both before and after the financial crisis began, the yen has wrong-footed forecasters who have as a group looked for it to weaken against the dollar.
But it has not given up its strength even as investors keep borrowing cheaply in yen to invest in other higher-yielding currencies, a process that should weaken the yen.
Part of the reason is that many have also scampered to the yen as a safe haven, as global economic uncertainty persists.
"It's still going to be a scenario that broader uncertainties in terms of economic performance will continue to see investors remaining relatively nervous and biased towards maintaining a safe-haven bid," Stretch added.
Recent data show the US economy is limping back to health but with presidential elections next week, and what to do about the impending "fiscal cliff" still left undecided, many investment decisions now appear to be frozen.
"If the fiscal cliff negotiations were to go to the wire, similar to last summer, then that could lead to a pickup in investor risk aversion," said Lee Hardman, currency strategist at BTMU in London.
"That would benefit both the dollar and the yen but given that the fiscal cliff issue is more of a US-specific problem that would lead to more yen outperformance versus the dollar."
Expiring tax breaks and decreased government spending are all expected to slow the US economy in the first quarter of next year.
Uncertainty around what will happen has already resulted in businesses deferring hiring plans.
Either way, it would appear that forecasters are waiting for a decisive break in yen strength before they change their views.
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