(Bloomberg) -- The Bank of Japan may surprise markets again by tightening monetary policy as soon as next month, according to Eisuke Sakakibara. 

The professor at Tokyo’s Aoyama Gakuin University, known as “Mr. Yen” for his ability to influence the currency during his tenure as Japan’s vice finance minister from 1997-1999, says there’s some potential for the BOJ to raise the cap on 10-year bond yields again at its next meeting. He sees the yen strengthening to 120 per dollar as the BOJ backs away from ultra-dovish settings.

“Maybe he could widen the band,” Sakakibara said in an interview with Bloomberg Television, adding BOJ Governor Haruhiko Kuroda had “sort of expedited the policy normalization a little earlier” this week. 

The yen surged as much as 4.8% on Tuesday after the BOJ unexpectedly raised its cap on 10-year bond yields to 0.5% from 0.25%. The nation’s government bonds slumped, while swap rates on 10-year Japanese government debt jumped to 0.74% as investors saw the central bank taking further steps to end its dovish policy.

The yen gained as much as 0.6% Thursday to 131.65 per dollar after advancing to as strong as 130.58 on Tuesday. It was trading around 132 at 10.10 a.m. London time.

Sakakibara in May correctly predicted Japan’s currency would weaken to 150, when it was trading around 128.

Investors around the world have been placing bets that the BOJ would eventually bow to pressure to alter its policy stance, but few had predicted the move would come this early — nor are many predicting more tightening to come as early as January. 

“Governor Kuroda likes to surprise,” Sakakibara said, referencing Tuesday’s decision to tweak policy. 

The BOJ may increase the yield band “quite significantly,” Sakakibara said, without giving a specific forecast.

--With assistance from Alice Gledhill and Sid Verma.

(Updates prices)

©2022 Bloomberg L.P.