Citi says USD/JPY could climb to roughly ¥163 per dollar if Japan’s Topix index reaches 4,500, above its current estimate of about ¥160. The bank ties the move to equity-driven flows but warns the link has loosened since 2024.
Citi projects that USD/JPY could reach approximately ¥163 per dollar if Japan’s Topix stock index rises to 4,500. The bank’s current estimate, based on where the Topix trades now, stands at around ¥160 per dollar.
Equity flows feed yen weakness
The forecast rests on how Japanese share gains move money across borders. Historically strong Japanese equities have triggered portfolio rebalancing and hedging activity by both domestic and international investors, which has amplified yen weakness.
That pattern applied to both domestic and international investors, according to the bank.
Why the link has loosened
The connection between equity performance and currency depreciation has weakened since 2024, which Citi attributes to narrowing monetary policy gaps and Japanese authorities’ yen-supporting intervention.
According to Investing.com, Citi flags a risk of further yen weakness from a shift in rate spreads or intervention policy: “Japanese authorities’ policy on intervention could pose a risk of further yen weakness.”
The bank recommends ongoing caution on the currency pair. The Topix, which underpins the scenario, tracks all domestic companies listed on the Tokyo Stock Exchange’s Prime Market section.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
