AM-One, a unit of E-Sun Asset Management: if the Bank of Japan raises interest rates in April, the US dollar is expected to fall below the 150 level against the yen.

Chief Investment Officer Shigeki Muramatsu of Asset Management One (AM-One), a subsidiary asset management company of Mizuho Financial Group Inc Sponsored ADR (MFG.US), stated that if the Bank of Japan raises interest rates in April, the yen is likely to further appreciate to a level of 1 USD to 150 JPY. The asset management company, managing approximately $512 billion in assets (as of the end of last September), also prefers to purchase ultra-long-term Japanese government bonds - which was the root cause of last month's bond market turmoil, as the yields of these bonds are relatively high compared to Japan's growth prospects. Muramatsu emphasized concerns in the market about the slow process of tightening monetary policy by the Bank of Japan. He stated in an interview, "Market speculation that the Bank of Japan may have difficulty raising interest rates under the current Japanese government leadership has led to the weakening of the yen. But I believe the actual situation is different." At the end of last month, the New York Fed called Financial Institutions, Inc. to inquire about the yen exchange rate. Wall Street viewed this as a sign that the US and Japanese authorities may be rare to take coordinated intervention measures to support the yen. The previously weakening yen suddenly reversed course, with the USD/JPY exchange rate quickly dropping from 160 to 152.10 last week, the lowest level in three months. The weak yen is expected to remain a key factor supporting the necessity of the Bank of Japan and the government to raise interest rates. Given the risks of yen depreciation leading to inflation, Japanese Prime Minister Kan Naoto is widely believed to have abandoned efforts to dissuade central bank officials from raising interest rates in December last year. Rising living costs caused turmoil before her appointment in October last year, leading her Liberal Democratic Party to suffer significant setbacks in two elections. US Treasury Secretary Janet Yellen has also urged Japanese authorities to allow the Bank of Japan to raise interest rates further to combat inflation. Currently, the currency market expects a 69% probability of the Bank of Japan raising interest rates before April, compared to around 40% at the end of last year. Shigeki Muramatsu stated that the apparent coordination between the US and Japan increases the likelihood of the Bank of Japan raising interest rates earlier. He said, "When Yellen makes such efforts to mediate, it's hard to imagine Japan not giving him a 'souvenir'." However, Muramatsu also pointed out that a drop in the USD/JPY exchange rate below the 150 mark could put pressure on the Japanese stock market. He added that in the long term, Asset Management One remains optimistic about the Japanese stock market, as Japanese households may invest more in risky assets. Institutions like BNP Paribas and SMBC Nikko Securities have pushed forward their expectations for the timing of the Bank of Japan's next policy adjustment to April after the January policy meeting. Even institutions still insisting on the possibility of the next action in June or July are increasingly indicating a rising risk of an early policy adjustment in the continued weak yen situation. In addition, the minutes of the Bank of Japan's January policy meeting also indicated a growing recognition of the necessity of timely rate hikes as authorities closely monitor the impact of the weak yen on inflation. Muramatsu also mentioned that 30-year Japanese government bonds look attractive. Concerns about the sustainability of Japan's finances prompted investors to sell 30-year Japanese government bonds after Suga proposed tax cuts before the elections without specifying the funding source. However, after soaring last month, the bond yields have stabilized around 3.64%. Muramatsu believes that the bonds should remain stable unless the tax cuts exceed the government's current commitment to cancel the consumption tax within two years. He pointed out that despite the declining growth trend of the Japanese economy, its bond yields are still higher than Germany's bonds of the same period. He also added that senior Japanese government officials have engaged in extensive communications after the sell-off in the bond market, and Suga has also softened her stance.