The yen is trading at fresh 2.5-year lows against the Dollar. Bank of New York Mellon's Simon Derrick says the Dollar/Yen could climb to over 100 in the next 12 months.

SHOWS: LONDON, ENGLAND, UK (REUTERS - ACCESS ALL) (JANUARY 14, 2012)

1. BANK OF NEW YORK MELLON, CHIEF CURRENCY STRATEGIST, SIMON DERRICK, SAYING:

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(QUESTION: What do you make of all of this? I mean you know, hard to get to 1%, let alone 2%, right?)
Yeah. I think that's a fair comment, that over the course of the last decade, we hardly had the best of outcomes when it comes to targeting inflation. But of course what we're really talking about here is they're going to keep going until they possibly achieve it. But, and it seems to me-
(QUESTION: What does the Yen do in the meantime? We've got, what, 89.67 is where we got to Dollar/Yen.)
Okay. Well, if we go back historically and we look at moves in Dollar/Yen in the past, when you get the big turns in Dollar/Yen, you can get back to 1995 or you can go back 2002, you go back- lots of periods in the 1980s. When they finally come, they tend to be extremely aggressive indeed. And so it's not just going to be a move to 90, this is going to be a move to the mid-90s. It possibly could even get as far as 100 over the course of the next 12 months because that's the kind of scale of move you get. Although simply enough, and we can understand what's happening to the Yen, we can understand what Japanese investors are going to do on the back of that, of course they're going to start looking overseas. What's interesting about this is what it means for the other nations in the region.
(QUESTION: Yeah. Well, let's talk about currency wars. Let's talk about where Korea fits in, where the Brazils fit in, the Switzerlands fit in. Where do you stand now on this currency war issue?)
Well, I think 2013 looks as though we've had a full scale revival of this. What is interesting at the moment is that it's not the US primarily driving the currency wars. That has historically been the case, but it really is about Japan more than anything else. You can see that in the way that South Korea has been intervening aggressively to try and keep some kind of competitive edge for its exporting companies against Japan in this move down. Now you saw comments coming out over the weekend from the South Korea Finance Minister, re-highlighting what's said in the G-20. It's interesting that it's not just him saying that, but we also had the comments from Mario Draghi last Thursday. He's also well aware of this as well. So all eyes are on Japan. And you've got a feeling that if they continue to do this, it's not just going to be South Korea that picks up intervention in the markets.
(QUESTION: Let's finish up and throw in the Yuan in there as well. Of course that hit a record high for second-straight trading day. This is a Dollar story really, isn't it?)
It is a Dollar story. And one of the great news is that over the course of the last 15 months, really since September 2011, China has pulled away from the market and has been intervening far less aggressively as reserve growth in the last 15 months is extremely modest when compared to any points in the last decade. The question though is if they are finding their competitive position undermined not by the US but by Japan, in this current environment, so remember their economy is only just starting to recover. Are they going to go back into the market again and become more aggressive? That's the question at the moment.'