Financial news agency, May 11 (Editor Liu Rui) since this year, the yen has experienced a free fall against the US dollar. However, recently, with some bullish comments on the yen beginning to appear on Wall Street, the relentless selling of the yen seems to be coming to an end.

On Tuesday, US Eastern time, Goldman Sachs and Scotiabank of Canada both issued research reports that they are mildly bullish on the yen, which is a rare view of Wall Street institutions recently.

Both institutions believe that the yen has been oversold to a certain extent. At the same time, Goldman Sachs believes that the yen, as a safe haven currency, can be regarded as an ideal recession hedging tool with configuration value.

The yen may have oversold?

So far this year, the yen has fallen by 12% against the US dollar, making it the worst performing major currency in the world.

The exchange rate of the yen against the US dollar has continued to decline this year, mainly due to the widening differences between the monetary routes of the two central banks.

On the one hand, the Bank of Japan continued to maintain a dove position and fixed the yield of its national debt at the bottom of history. On the other hand, the Federal Reserve continued to tighten monetary policy, and the yield of U.S. Treasury bonds also soared due to the expectation that the Federal Reserve would significantly raise interest rates.

In addition, at a time when commodity prices soared, Japan's status as a commodity importer also put pressure on the yen.

The US dollar has moved against the yen in the past six months, but Karen reichgott Fishman, a strategist at Goldman Sachs, believes that the current exchange rate of the yen against the US dollar is undervalued by 20%-25%. At a time when the risk of global recession is rising, the yen is the cheapest safe haven asset.

Fishman believes that if there is an economic recession, it may cause the exchange rate of the US dollar to fall by 15%-20%.

"In the short term, in the case of high volatility in the global market, the yen may be affected by changes in U.S. Treasury bond yields and commodity prices," Fishman wrote. "At the same time, we believe that the yen valuation is low, and there is a risk of intervention that cannot be ignored, and most importantly, the possibility of economic recession is rising. These factors, combined, will open the way for the decline of the dollar against the yen."

The decline of the yen has been suspended recently

Fishman added that the exchange rate of the yen against the US dollar had fallen to the level where officials suggested that intervention measures might be increased.

It is worth mentioning that Fishman's remarks are in sharp contrast to her remarks last month, indicating that her attitude has changed.

Last month, she also commented that the government's intervention is unlikely to promote the "sustained appreciation" of the yen.

On Wednesday, the yen traded near 130.26 yen against the dollar, not far from the 20-year low of 131.35 yen hit on Monday. But compared with previous months,

The yen exchange rate barely changed in May, and it seems that its decline has eased. In April and March, the yen fell by more than 6% and 5% against the US dollar respectively.

Shaun Osborne, an analyst at Scotiabank in Canada, and others also wrote in the report that although the long-term adverse factors of the yen have not changed, the "short trend" may be slowing down, opening the door to a moderate reversal. They believe that at present, "the yen is basically in a serious oversold state."