Yen at 120 Seen Needed by UBS Wary of Weimar-Japan Redux

The new chief investment officer for Japan at UBS AG’s wealth management division likens the nation to a man with $1.2 million in debt who is spending all his $53,000 salary and still borrowing $40,000 a year.

Japan has no option but to fuel inflation to reduce its borrowings, while the challenge is to avoid the hyperinflation that engulfed Germany’s pre-World War II Weimar Republic and impoverished its people, according to Fumio Nakakubo, who joined UBS from BlackRock Inc. this year. The yen must drop to about 120 per dollar to spark the increases in consumer prices needed to reduce Japan’s debt load, he said.