Goldman Sachs Group Inc. expects the yen to appreciate to 150 per dollar over the next 12 months, reversing a bearish stance adopted in July as domestic policy shifts and potential capital repatriation strengthen the currency’s outlook. Strategist Karen Reichgott Fishman revised the firm’s 12-month yen forecast to 150 per dollar from 165, while lifting three- and six-month targets to 158 and 155, respectively. The shift reflects the Bank of Japan’s faster pace of rate hikes and a greater likelihood of domestic capital flowing back into Japanese assets, she wrote in a report.

“Together, these developments raise the attractiveness of being long JPY, especially to protect against an onset of recession fears,” Fishman wrote. Faster rate hikes have blunted the inflationary impact of expansionary fiscal policy and eased pressure on the yen, according to Fishman. While a shift in portfolio flows remains speculative, its growing probability creates “downside asymmetry” in USD/JPY, boosting the currency’s appeal as a portfolio hedge, she wrote. Goldman follows Bank of America Corp., which earlier revised its forecast to 149 per dollar by year-end. The Japanese currency strengthened to as high as 158.28 per dollar on Friday, after Finance Minister Satsuki Katayama said US President Donald Trump shared concerns over the weak yen during a meeting with Prime Minister Sanae Takaichi. Goldman retains a cautious tactical bias in the near term and prefers shorting EUR/JPY.