The yen's trend has fallen into a quagmire. So far this quarter, the USD/JPY exchange rate has dropped about 4.5%, making it the top among the G10 currencies in terms of decline. During Wednesday's US trading hours, the yen briefly fell to 155.04 yen per dollar, and by Thursday morning Tokyo time, it was even reported at 154.96. Market participants are increasingly skeptical about whether Japan's new government can effectively support the yen's exchange rate.
Policy Contradictions Behind the Yen's Depreciation
Unlike last year, when the Bank of Japan intervened before raising interest rates, Prime Minister Sanae Takashi is now promoting fiscal expansion plans while expressing a willingness to slow down rate hikes. These measures themselves are weakening the yen.
Japanese Finance Minister Shigeyuki Katayama issued a warning on Wednesday, believing that market trends have become one-sided and are moving too quickly, with the negative impacts of yen depreciation becoming more apparent. She stated in Parliament: "The government is closely monitoring any excessive and disorderly fluctuations with a high sense of urgency."