ForexSpace.com - Forex analysts at Deutsche Bank are suggesting that, thanks to a number of factors affecting the Japanese economy, their yen is likely to undergo a revision for USDJPY; from 75 to 82 by the end of the year.

They have forecast a similar revision of 85 to 90 for the end of 2013.

According to Peter Garnham of FXNews, the upgrade represents one of the more pronounced revisions of recent years. "Historically USDJPY has fallen to around 20 percent below purchasing power parity (PPP) before finding a medium-term base. Only in 1995 did it move to more extreme levels, with a 40 percent drop," he says.

Deustche analysts have cited last year's colossal intervention from the Bank of Japan and the ministry of finance as a key influencing factor behind the revision. Back in March, over $546bn was pumped into the nation's ailing banks and insurers, suffering as a result of a string of natural disasters.

"We expect that the turn will start to become apparent this year, but will gather momentum in 2013", Bilal Hafeez, head of FX startegy at Deutsche told FXNews.

"Our sense is that a 20 percent overshoot ins the more likely limit for USDJPY in the current cycle. This in turn suggests that breaching last year's low of 75 may be possible, but is unlikely to be enduring."

Also noted by Hafeez and the Deutsche analysts are the weakening terms of Japanese trade. Last month, Japan posted a record trade deficit of 4.41 trillion yen for 2011, exceeding the 3.13 trillion yen recorded in fiscal 1979 during the second oil crisis. According to Deustche, the combination of such trade data and productivity rates makes the yen stand out as one of the most overvalued currencies in the world.

Speaking at the time of the data release by the Ministry of Finance, Jesper Koll, head of equities research at JPMorgan in Japan said "What it means is that the time when Japan runs out of savings -- 'Sayonara net creditor country' -- that point is coming closer," said Jesper Koll, head of equities research at JPMorgan in Japan.

"It means Japan becomes dependent on global savings to fund its deficit and either the currency weakens or interest rates rise."

The recent strength of the Asian currency is also likely to have had a significant impact on its trade performance.

Hafeez also cites US monetary policy as a reason for the anticipated turn in USDJPY. Recent hawkishness from the Fed - coupled with some positive growth data - has reduced the possibility of further easing measures for the United States, supporting the currency pair in its position.

"All the above suggest the major downtrend in USDJPY is behind us", he said. "There could still be bouts of yen strength, particularly in the near-term, but we believe the trend is in the midst of turning."

Sarah Cox. Staff Writer