HONG KONG (AFX-ASIA) - The yen is expected to weaken further to 150 against the US dollar in the third quarter before strengthening slightly to 145 by the end of the year, BNP Paribas global head of market economics Paul Mortimer-Lee said. He told a briefing that a weaker yen will put pressure on some of the regional currencies and he was pessimistic on Japan undertaking the necessary structural changes to stabilise its economy. "Japan needs a crisis... a big one," he said. Mortimer-Lee said with the situation in Japan's banking sector deteriorating, the government will need to engineer public fund injections just to keep the banking system afloat. Each bail-out will further swell public debt, which will further increase the risk of an eventual fiscal crisis. "Running on the spot is the best Japan can hope for without a more radical response," he said. He said it is unlikely that Prime Minister Junichiro Koizumi will undertake any major structural changes at this point in time, especially with his waning popularity. He said unlike other counties with economic problems, Japan is a lender of funds and hence it is difficult for governments to put pressure on Japan to undertake reforms. Mortimer-Lee said Japan seems to think that a weaker yen will help its problems but this is unlikely to work. He said the US is unlikely to tolerate a weak yen, especially with its mid-term elections nearing and US manufacturers complaining of unfair competition. In addition when the yen moves nearer to the 150 level, there will be strong pressure especially from Asian countries and corporates for a firmer yen. Mortimer-Lee also said the US Federal Reserve is not likely to raise interest rates until the end of the year. "Since there is no inflation, there is no reason to stifle growth," he said.