Bank of America Global Research maintains a bearish bias on JPY into year-end.
"Weak yen trend to be in place as energy imports seasonally rise in the winter, offsetting potential auto export recovery. • Policy divergence could drive FI flow in 2022, offsetting rise in domestic inflation and talk of BoJ leadership change • Weak yen trend, JPY's undervaluation in PPP, market interest to support JPY volatility," BofA nots.
"We have been bearish on JPY primarily as the shift in terms of trade triggered by supply constraints would widen Japan’s trade deficit. Our latest study shows JPY has a scope to decline by 1-5%, assuming the current Brent crude oil price and rates differentials," BofA adds.