The yen’s recent rally has taken it past levels many Japanese companies use to forecast their earnings, raising the risk of exporters cutting their guidance and hampering the stock market recovery.
With stronger signals coming from the Bank of Japan and Federal Reserve on monetary policy, the yen has gained 3.5% against the dollar since the end of July, with some analysts now forecasting it to hit 135 by the end of the year.
That’s beyond the average assumption of 144.77 indicated in the BOJ’s latest quarterly Tankan poll of more than 9,000 enterprises. It’s also stronger than the assumptions of large exporters such as Toyota Motor Corp. and Honda Motor Co.
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