BOJ may halt rate hikes if yen nears 130 vs dollar, Goldman says

TOKYO, April 14 (Reuters) - The Bank of Japan could halt interest rate hikes if the yen approached 130 to the dollar, Akira Otani, a former top central bank economist who is currently managing director at Goldman Sachs Japan, said on Monday.

While risks from U.S. tariffs and the ensuing market volatility remain high, the BOJ is likely to proceed with gradual interest rate hikes as Japan's economy is seen achieving growth exceeding its potential, Otani wrote in a research note.

However, the central bank could bring forward or accelerate rate hikes if the dollar exceeds 160, and conversely, "could consider halting rate increases if it were to approach 130," he said.

The dollar fell 0.62% to 142.62 yen JPY=EBS on Monday.

While data up to the pre-pandemic period showed the benefits of a weaker yen on the Japanese economy, recent data no longer provided clear evidence of such positive impact, he said.

The negative impact on the economy of a weaker yen is becoming more apparent as more companies pass on rising import costs to households, particularly for the elderly, Otani said.

"In view of these changes, the BOJ appears to be more aware of the negative impact of a weaker yen" than in the past in setting monetary policy, Otani said.

He added that the central bank appeared to be more tolerant of yen appreciation than in the past.