Top yen forecaster predicts ¥147 per dollar as rate gap narrows

Neil Parker has spent nearly three decades tracking the yen, through financial crises and sharp currency swings. Now, the top dollar-yen forecaster in Bloomberg’s latest rankings sees the Japanese currency rallying toward ¥147 per dollar next year as Japan’s interest-rate gap with the U.S. narrows.

His call puts him at the bullish end of a deeply divided market. While Parker sees the yen strengthening to around ¥155 by year-end before appreciating further, Bloomberg’s top forecaster in the previous quarter sees it weakening as far as ¥170 next year.

At the heart of the divergence is Japan’s interest-rate outlook. Parker expects the Bank of Japan to raise its benchmark rate from 1.25% to at least 2%, potentially 2.25%, a more aggressive outlook for tightening than much of the market expects. The Federal Reserve, meanwhile, may raise interest rates once more in December before stopping at around the 4.00-4.25% range, according to Parker.

“Japan may prove to be an outlier in terms of the Bank of Japan actually delivering on its promise to bring interest rates into line with where inflation is,” said Parker, head of economics and market strategy at foreign-exchange and payments firm TTT Moneycorp Limited.

Japanese market participants are divided over whether stronger inflation prompts faster tightening by the central bank. Japan’s consumer price index excluding fresh food and energy, a metric closely monitored by the BOJ as a gauge of underlying inflation, advanced 2.4% in September. Parker said that a pickup to 2.6% or higher could prompt a stronger central bank response and speed the path for tightening. He also isn’t convinced the central bank will move as soon as December.

That difference in the pace of tightening underpins his yen forecast. Another roughly 50 basis points of narrowing in Japan’s interest-rate gap with the U.S. — roughly the amount Parker expects by the middle to latter part of next year — could be enough to recalibrate investor expectations, he said.

“Investors aren’t necessarily going to become overweight in Japanese assets,” he said. “They just need to be less underweight.”

The yen has averaged around ¥158 per dollar this year and weakened to as far as ¥163.99 in July before Japanese and U.S. authorities intervened. Sharp market moves have tested Parker’s forecasts, but he is reluctant to change his outlook unless the economic fundamentals underpinning it have shifted.

In making his forecasts, Parker compares market expectations for interest rates and inflation with his own, looking for gaps that can inform his currency forecasts.

“One thing I do is I try and block out a lot of the noise,” he said. “I’m focused on no more than a few factors around the macro, rather than all of the speeches or commentaries or anything else that you will hear from both Japan and also other major economic jurisdictions.”

Using a similar approach, Parker also topped Bloomberg’s euro-yen forecast rankings, though he says his call was helped by a longstanding bearish view of Europe’s economy and some luck.

“The euro-yen forecast has been more fortuitous in some respects than dollar-yen,” he said, pointing to his negative view on the euro amid aggressive interest rate cuts and a lack of economic resilience in Europe. “Dollar-yen I think you can follow the macro a lot more.”

Parker began his career in financial markets in 1995 and has followed the yen and other major currencies for decades. He joined London-based TTT Moneycorp in 2025, according to his LinkedIn profile. TTT Moneycorp is a foreign-exchange and payments firm that also topped Bloomberg’s latest EUR/USD and USD/CHF forecast rankings.

Making yen forecasts was easier earlier in his career when the currency more closely followed the macro, Parker said. Still, he doesn’t find the yen particularly difficult to predict today, pointing to a Japanese central bank that is more reactive to data, particularly around inflation.

“The construct around currency forecasting is not where you see things going,” said Parker. “It’s where you see things going relative to where the rest of the market thinks.”