To all but a handful of analysts, the ascent of the US dollar seems unstoppable. The failure last month of the Group of Seven finance ministers to agree a strategy to support the yen and Tokyo's apparent insistence it is doing all it can to revive its ailing economy have done nothing to deter the dollar bulls. Forecasts of a dollar-yen rate approaching 135 yen by June are rife, with little confidence in the Japanese Government's ability to breathe some life back into the yen by means of fiscal measures. JP Morgan head of foreign exchange research Avinash Persaud calls it package fatigue. There have been four economic packages - worth tens of trillions of yen - since October last year, and none have managed to pull the economy out of its quagmire. Since the latest, unveiled just over a week ago, the dollar has gained further and analysts believe the medium-term outlook looks bleak for anyone with long yen positions. Strategists advise the last chance to bail out will probably be as the financial year closes at the end of the month, ahead of which Japanese corporates traditionally sell portions of their overseas investments to bolster their balance sheets. They believe such a flood back into yen will temporarily depress the dollar, but the weakness is expected to quickly ebb once the annual corporate audits are over and Japanese treasurers go in search of high yields again. Whether Tokyo will try to stop this, and use the new financial year as a chance to launch a comprehensive and convincing programme of fiscal consolidation, is the subject of much debate. Goldman Sachs' currency research managing director Jim O'Neill thinks the market is riding for a huge fall. In the face of almost overwhelming yen bearishness, he is forecasting a sharp fall to 120 yen by mid-year. He believes fiscal measures could come as early as next month, providing the much sought-after surge in domestic demand, which is regarded as the key to unlocking growth in Japan. Mr O'Neill predicts the government will stump up an additional five trillion yen (about HK$306.3 billion) in public spending, plus a smaller, further tax cut. He believes Premier Ryutaro Hashimoto will signal a policy change, shifting the tax system away from income and more into consumption. Optimism that Japan will produce a fiscal package is also shared by Gerard Lyons, chief economist at DKB International, but he believes it will not prove sufficient to derail the dollar's rise. The 10 trillion yen package he expects would be 'not as big as the market needs'. Last year, the Japanese consumer was taxed, including higher insurance charges, to the tune of 8.5 trillion yen. 'The scale of reflation necessary is still quite considerable.' Mr Lyons said. He believes the situation will become much worse before it gets better. He believes the failure of the fiscal package will give added impetus to the dollar, sending it soaring to as high as 140 yen by mid-year. Its only saviour will be a slight splutter in the US economy in the second half, as deflationary pressures from Asia, and ironically the ever-widening trade deficit, prompt economic slowdown. Standard Chartered treasury economist Claudio Piron has the dollar at 135 yen by mid-year, but sees the problems for the currency going far beyond economic policy, to the heart of the Japanese financial administration. He believes finance ministry officials see fiscal reform as a dilution of their power and are so opposed that he doubts whether a fiscal package will materialise. 'It's quite clear to anyone that Japan's situation is easy to solve. It only needs tax cuts to get the economy going again, and running a budget deficit at 5 per cent is not all that difficult. 'You have to ask why this has not been done for the past eight to nine years. You have to point to the ineffectiveness of the political system.'