The Japanese yen remains under pressure as the country’s central bank maintains its ultra-loose monetary policy, keeping interest rates near zero. This stance contrasts sharply with other major economies, where central banks have been aggressively raising interest rates to combat inflation.

The low interest rate environment in Japan makes the yen less appealing to investors seeking higher returns. Consequently, capital flows tend to move away from the yen and towards currencies offering better yields, contributing to the yen’s depreciation.

Analysts suggest that the yen’s weakness could persist as long as the Bank of Japan maintains its current monetary policy. Any shift in policy, such as raising interest rates, could provide support for the yen. However, the central bank has so far resisted calls for a change, citing concerns about the fragility of the Japanese economy.

The impact of a weaker yen is mixed. While it can benefit exporters by making their products more competitive, it also raises the cost of imports, potentially fueling inflation. The government is closely monitoring the situation and has indicated that it is prepared to take action if necessary to stabilize the currency.

The Japanese yen is experiencing sustained weakness due to the country’s persistent low-interest rate environment. This policy diverges significantly from the approaches of other major central banks, many of which are either raising interest rates or contemplating such measures to address rising inflation.

The Bank of Japan (BOJ) has maintained its ultra-loose monetary policy, characterized by negative interest rates and yield curve control, in an effort to stimulate economic growth. However, this policy has created a substantial interest rate differential between Japan and other nations, making the yen less attractive to investors.

As a result, capital is flowing out of Japan in search of higher returns elsewhere, further weakening the yen. The currency’s depreciation is also being exacerbated by concerns about Japan’s trade deficit, which has widened due to rising import costs, particularly for energy.

Analysts predict that the yen will remain under pressure as long as the BOJ maintains its dovish stance. The currency’s trajectory will depend heavily on the future direction of monetary policy both in Japan and in other major economies.

Here are some factors influencing the Yen:

• BOJ’s monetary policy
• Interest rate differentials
• Global inflation trends
• Japan’s trade balance