(April 2): The yen could slide to hit 160 per dollar unless the Federal Reserve cuts interest rates this year, according to Bank of America Corp.

Any intervention from the Bank of Japan to try to prop the currency up will be ineffective until the US starts easing monetary policy, says the bank’s global head of Group-of-10 currency strategy Thanos Vamvakidis. The yen has already hit three-decade lows and is flirting with the 152 per dollar level that many say would force Japanese authorities to act.

Intervention “is very likely but it would be more like leaning against the wind,” Vamvakidis said in an interview on Bloomberg Television. He sees the yen rallying to 142 if the US central bank does go ahead with cuts, as expected by markets.

It’s a view that chimes with other strategists who anticipate any BOJ intervention to only offer brief support to the yen. The currency has already weakened beyond levels that prompted authorities to enter the market in 2022, and officials have ramped up warnings against speculative moves.

“They know very well from past experience that these interventions don’t work,” Vamvakidis said. “It’s mostly a threat to create some caution and two-way risk in the market, they know everything depends on the Fed.”

The yen held its ground at around 151.65 per dollar on Tuesday, after falling to a 34-year low near 152 last week. It’s lost 7% this year, making it one of the worst-performing G10 currencies.

The outlook for the yen is dependent on the path of Fed cuts because of the wide interest-rate gap between the US and Japan, which makes Japanese assets less attractive. While traders expect around 65 basis points of US easing in 2024, that’s heavily scaled back from bets on more than 150 basis points of cuts at the start of this year.