Vanguard warns of 170 yen

Vanguard has warned that the dollar/yen could move toward 170. Vanguard, which manages about $1.7 trillion, warned that the dollar/yen could move toward 170 if the Bank of Japan disappoints in its policy change. Ales Koutny, the fund’s head of international bonds, said even a small cut in its monthly bond purchases of 6 trillion yen ($37 billion) would disappoint markets. “If bond purchases decline to just 5.5 trillion yen a month in July, or even 5 trillion yen, markets could push the dollar/yen toward 170,” Koutny said. Koutny said the tapering should be accompanied by rate hikes, adding that “if they disappoint on either front, there’s only one direction the dollar/yen can go.” According to a Bloomberg survey, only three economists expect the BOJ to both reduce bond purchases and increase interest rates in July.