The yen may rise to a record 74 per dollar by 2011 because the Bank of Japan hasn't done enough to combat deflation, said Eishi Wakabayashi, a strategist who forecast the currency's surge to an all-time high in April 1995.
Wakabayashi said the BOJ should re-think its "fundamentalist" stance on combating inflation while neglecting measures to stimulate the economy.
Prime Minister Yukio Hatoyama's government should revise the central bank's by-laws to give it a mandate to stabilize prices and expand employment, similar to that provided to the U.S. Federal Reserve, he said.
Any attempt by the Bank of Japan to stem the yen's advance would be "foolish and would have little effect," Wakabayashi, 66, said in Tokyo.
Japan should ask the U.S. and Europe to take coordinated action to weaken the yen, financial services minister Shizuka Kamei said Wednesday in Tokyo. Japan hasn't intervened in the foreign-exchange markets since March 2004.
The dollar will briefly reverse its decline after falling to ¥80 in February, Wakabayashi said.