Morgan Stanley Predicts Yen Surge, US Dollar Drop
Update: 2025-11-25
Description
Japanese yen could surge nearly ten percent against the US dollar in the coming months, according to Morgan Stanley strategists. This prediction is based on the Federal Reserves potential back-to-back interest rate cuts due to signs of a US economic slowdown. The dollar-yen exchange rate is currently out of sync with its fair value, and if it corrects, the yen could strengthen by the first quarter of 2026. However, the yens recent struggles, including concerns about Prime Minister Sanae Takaichis spending plans and fading expectations for a near-term interest rate hike from the Bank of Japan, have led to a five point six percent drop against the dollar this quarter. Despite these challenges, the yens weakness has sparked discussions about official intervention in the market.
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