JPMorgan sees 'perfect storm' for yen in Q4

The Japanese currency may appreciate to 85 per dollar by year-end, said John Normand, global head of foreign-exchange strategy in London at JPMorgan. The yen's momentum will accelerate as the global economy recovers and interest rates in countries including the U.S. and the UK stay near zero, he said. The Bank of Japan's key rate is 0.1 percent. “The yen is no longer the best-funding currency globally,” Normand said in an interview.

“It competes for that title with the dollar and the pound. The yen no longer weakens reflexively when growth accelerates and equities rally, since this recovery comes as global rates converge on Japanese levels.”

The yen strengthened 0.1 percent to 89.52 per dollar as of 8:35 a.m. in London.

Japan's currency climbed 7.7 percent versus the U.S. currency since June, strengthening to less than 90 yen per dollar for the first time since February on Sept. 25, amid speculation the new Japanese government won't act to weaken it. The nation posted a trade surplus of 185.7 billion yen (US$2.1 billion) in August, government figures last week showed. The Nikkei 225 Stock Average jumped 23 percent since March.

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