Rabobank: Expectations of a Bank of Japan rate hike coupled with a return to fiscal discipline could strengthen the yen to 145.

Rabobank strategist Jan Foley points out that Japanese Prime Minister Sanae Takaichi has pledged to implement responsible fiscal policies, and the Bank of Japan is likely to raise interest rates further, which should strengthen the yen. Foley states that Takaichi's recent victory in the snap election has allowed her to extricate herself from the campaign debates sparked by the main opposition party's more accommodative fiscal stance. "Another reassuring factor is Japan's large domestic savings." With the Bank of Japan potentially raising interest rates further this year, Foley predicts the dollar/yen exchange rate will fall from its current level of 153.23 to the 145 level within 12 months. (Jinshi)