The Japanese yen depreciated against the US dollar and other major currencies on Monday, driven by expectations that the Bank of Japan (BOJ) will continue its policy of near-zero interest rates. This stance diverges from other major central banks, such as the Federal Reserve and the European Central Bank, which are actively raising interest rates to combat rising inflation.

Market analysts suggest that the widening interest rate differential between Japan and other economies is a key factor contributing to the yen’s weakness. Investors are increasingly attracted to higher-yielding currencies, leading to capital outflows from Japan and downward pressure on the yen.

The BOJ has repeatedly stated its intention to maintain its current monetary policy until it sees sustained inflation driven by domestic demand. However, some analysts believe that the BOJ may eventually be forced to adjust its policy if the yen’s weakness becomes too pronounced or if inflation begins to accelerate more rapidly.

The yen’s depreciation could have significant implications for the Japanese economy. While it could benefit exporters by making their products more competitive, it could also lead to higher import prices and potentially fuel inflation. The BOJ will need to carefully weigh these factors as it considers its future monetary policy decisions.