Safe-haven demand will keep the yen strong as increasingly worried investors act as a counterweight against authorities intent on weakening the Japanese currency through intervention, a Reuters poll showed.
The latest survey found the first consensus for dollar/yen below 80 in a decade of monthly foreign exchange surveys. Responses to the poll were collected before global equity markets went into a tailspin on Thursday.
Strategists were asked if they had revised their forecasts after the Ministry of Finance intervened in markets on Thursday and sold one trillion yen ($12.5 billion) and the Bank of Japan (BoJ) expanded its asset purchase programme.
Most left them unchanged, saying they had expected intervention but that it would only weaken the yen in the short-term as investors remain focused on the eurozone debt crisis and a global economic slowdown. The poll found expectations for a gradual depreciation in the yen against the US dollar over the next 12 months, predicting dollar/yen to end August at 79, before rising to 82.9 in six months and 86.0 in a year. These are markedly lower dollar/yen forecasts compared with the July consensus for 81, 85, and 88.5.