The year’s big yen short set for a dramatic U-turn in 2023

Banknotes of Japanese yen are seen in this illustration picture taken June 15, 2022. REUTERS/Florence Lo/Illustration

NEW YORK: The world’s worst-performing major currency looks poised for an impressive turnaround in 2023 as its two key drivers – a hawkish Federal Reserve (Fed) and dovish Bank of Japan (BoJ) – swap places in the eyes of some investors.

The yen – a favoured short against the dollar for a majority of this year – could rally more than 7% from current levels next year, according to Barclays Plc and Nomura Holdings Inc, while Vontobel Asset Management AG said fair value is below 100 per dollar – over 30% stronger.