Prudential's multi-income bond strategy deputy fund manager Zhong Xiaoyang expressed his views on the outlook for the Japanese yen. The recent meeting between the Japanese Finance Minister and the US Treasury Department has further strengthened market speculation about the Japanese authorities' readiness to intervene in the foreign exchange market. Prudential stated that when the authorities take intervention measures in 2022, the average increase in the yen exchange rate is about 2%, but past intervention measures have mostly failed to change the trend of yen depreciation. Overall, even if the authorities' intervention is expected to bring temporary support to the yen, it may still continue to depreciate to a level of 160 yen per dollar. Prudential believes that the depreciation of the yen is still slower than in 2022, and the strength of the authorities' intervention may be weaker. The main factors affecting the US dollar against the yen are the interest rate differentials between the US and Japan. The depreciation of the yen does bring positive effects to Japanese stocks, promotes companies to increase wages, and brings Japanese inflation closer to the Bank of Japan's target of 2%. However, the Bank of Japan has stated that they are mainly concerned with how to curb excessive fluctuations in the foreign exchange market, rather than setting a specific exchange rate level. The current depreciation speed of the yen is lower than in 2022, so the strength of the authorities' intervention may also be weaker. In addition, option pricing shows that the market has already reflected the possibility of the Bank of Japan taking intervention measures in May. Previously, the recent meeting between the Japanese Finance Minister and the US Treasury Department has further strengthened market speculation about the Japanese authorities' readiness to intervene in the foreign exchange market. When the authorities took intervention measures in 2022, the average increase in the yen exchange rate was about 2%, but most past intervention measures have failed to change the trend of yen depreciation. Prudential stated that the US election will bring potential risks, and the Federal Reserve is unlikely to cut interest rates multiple times. In addition, the US election will bring potential risks in the second half of this year. If Trump wins and uncertainties about tariffs increase, it may put pressure on other major currencies, including the yen. Given the interest rate differentials between the US and Japan, the outlook for the yen will depend more on market pricing reflecting the Federal Reserve increasing the number of interest rate cuts, rather than the Bank of Japan quickly raising interest rates. However, the current market expects the US to cut interest rates 1.5 times this year, indicating that the market has already ruled out the possibility of multiple Fed rate cuts. Overall, even if the authorities' intervention is expected to bring temporary support to the yen, it may still continue to depreciate to a level of 160 yen per dollar.