UBS Says Dollar-Yen May Rise to 175 on Extended Oil Disruption

The yen’s slide is seen continuing even as Japanese officials ramp up intervention rhetoric, according to UBS Group AG strategists, who see the dollar-yen pair reaching 175 by year-end in an “extended disruption” scenario.

If oil prices were to rise toward $150 a barrel, “using FX intervention to try to control inflation could potentially be a case of providing the market a higher level at which to sell JPY, at the expense of running down FX reserves without necessarily changing the trajectory,” strategists including Shahab Jalinoos said in a note published Wednesday. Efforts to curb inflation may instead rely more on fiscal measures such as energy subsidies, they added.