Japan’s yen is likely to remain weak
The Japanese yen is expected to continue weakening due to various economic factors.
The environment for a weaker yen currency looks set to persist for a bit longer, with the USD/JPY recovering back to test the 160 mark.
The Bank of Japan has spent around $240 billion in FX intervention to cap USD/JPY since mid-2022, with the yen being 35% undervalued relative to purchasing power parity.
Despite efforts to intervene, the yield differential between Japan and the US remains significant, keeping Japanese investors in Treasuries and contributing to the yen’s weakness.