'Mr Yen' sees surge in currency in latter half of 2016

Tokyo

WHEN the yen started 2016 as the developed world's best performer, most analysts were taken by surprise. They had been forecasting a record-extending fifth year of declines as central bank easing weighed on the exchange rate.

Not Eisuke Sakakibara. The former Finance Ministry official in charge of currency intervention correctly predicted Japan's currency would rally towards a more than one-year high of 110 per US dollar. And now the man dubbed "Mr Yen" for his ability to influence the exchange rate in the 1990s is more bullish still, seeing a surge of about 6 per cent to 105 in the second half of this year as the outlook for the world economy worsens.

"The yen's appreciation isn't the result of monetary policy or because Japan's recovery is strong, it's that the world economy has become very disorderly," Prof Sakakibara, who is currently a professor at Aoyama Gakuin University, said in an interview on Tuesday in Tokyo. "The problems in the Chinese economy won't be so easy to sort out, and global growth is stagnating. In that environment, the yen will necessarily strengthen. We…