Why did yen weaken?

Since September 21st, the Japanese yen (JPY) has weakened sharply against the U.S. dollar (USD). A 200\%+ rise in Asian coal and natural gas prices may be part of the reason for the fall (Figure 1). Japan imports 100\% of its coal and 98\% of its crude oil and natural gas.

Why does Japan want a weak yen?

Japanese policymakers typically favour a weak yen, as it gives exports a competitive advantage overseas. “For consumers, a weak yen aggravates the pain from higher commodity costs. It’s particularly damaging for low-income households,” said Ryutaro Kono, chief economist at BNP Paribas.

Why is the JPY depreciating?

Yen outlook challenged by economic underperformance and BoJ policy inertia. “Extended COVID-19 emergency restrictions, which have resulted in the economy slumping into an H1 recession. Moreover, the lack of activity has proved to extend long-term disinflationary influences.

Will the Japanese yen get stronger 2020?

The Japanese Yen forecast is often a point of difference for major banks. However, this time major Australian banks agree the Japanese Yen will be firmer against the US dollar by the end of 2020.

Why is Japanese yen so inflated?

Japan’s trade strength lies in manufactured goods rather than commodities, but the idea is the same. A large trade surplus due to export sales of cars, cameras and electronic devices has traditionally meant a high demand for yen by foreigners to pay for these products.

Why is yen strengthening?

The Japanese yen has see-sawed in the last 35 years, particularly in the first decade after the 1985 Plaza Accord, in which a deal was made to devalue the U.S. dollar, therefore strengthening the yen.

Why Japan would be concerned by a strengthening yen?

The yen’s strength derives from its safe-haven status and the fact that much of Japan’s wealth is held overseas, in foreign assets and currencies; in a crisis, investors repatriate the yen, boosting its demand and giving it strength.