Expect the yen to weaken to levels last seen more than 30 years ago if the Bank of Japan sticks to its dovish stance, says Goldman Sachs.

Over the next six months the yen is projected to reach 155 per dollar — the weakest since June 1990 — according to the bank’s strategists led by Kamakshya Trivedi. They had previously expected the yen to trade to 135.

“As long as the BOJ remains far from hiking rates and equities stay reasonably well supported, the yen should continue to trend weaker,” the strategists wrote in a note dated Friday. Improving US growth outlook was also a factor in their bearish view.

Loose monetary policy in Japan while the Federal Reserve and other central banks hiked rates has weighed on the yen, making it the worst performer among its peers in the Group of 10 this year. The markets had been primed for a yen rally that has failed to materialize as the new head of Japan’s central bank maintained his cautious approach, thwarting hopes for more substantial BOJ action.

Read more: BOJ Chief Says Strategy Backed by Below-Target Inflation

The strategists expect the currency could once again strengthen in 2024, reaching 135 by the end of next year. The yen traded flat near 146.51 against the dollar on Monday. It has lost more than 10% this year.

“The main risk to this forecast of more yen weakness over the next six months is that higher inflation and currency depreciation proves more unpopular and catalyses more forceful responses in the form of currency intervention or an earlier hawkish shift from the BOJ, or both,” they wrote.

--With assistance from George Lei.

(Updates markets in fifth paragraph)