The financial markets have finally come around to our long-held view that the Bank of Japan will hike rates once more before year-end. With domestic economic data mixed, that probably reflects the repricing of US interest rate expectations over the past month, which has sent the yen sharply lower. And in the wake of the US presidential election, we’ve revised our forecasts for the exchange rate and now foresee only a small appreciation by the end of next year.
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