Yen shows significant value as a recession hedge – Goldman Sachs

Despite the yen closing in on a 24-year low vs. the US dollar, Goldman Sachs Group Inc. strategists still remain bullish on the Japanese currency.

Key quotes

“We see rising chances of a change in the policy mix in Japan -- in the form of FX intervention or a shift higher in the yield-curve control tolerance limit.”

“The scenario where yen depreciates on a trend basis due to uniquely weak domestic inflation seems a relatively low probability outcome.”

“A US recession could lead to a 15%-20% drop in the dollar-yen.”

• USD/JPY attempts a rebound from 133.80, downside looks likely on improved risk appetite