Yen at Risk of Being Dragged Down by Japan’s Sputtering Exports
- Export rivals in Asia have seen their currencies weaken
- Japan’s trade deficit widening even as commodity prices ease
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The yen has room to weaken further as Japan’s deteriorating international trade position adds to pressure to maintain a softer currency, potentially hindering the Bank of Japan’s scope to battle inflation with tighter monetary policy.
The Japanese currency has already slumped more than 7% since mid-January, reversing the bulk of the gains it made after the BOJ officials in December tweaked their yield curve control policy tools and spurred speculation about potential benchmark rate hikes.