A senior Japanese economist has warned that the yen is increasingly at risk of sliding to 160 per dollar, arguing that interest-rate moves by the Bank of Japan may do little to arrest the currency’s depreciation.
Koichi Fujishiro, chief economist at Dai-ichi Life Research Institute, said the yen’s persistent weakness, despite a narrowing Japan–U.S. rate differential over the past year, suggests that even further BOJ tightening would struggle to stop the currency’s decline. That disconnect, he said, strengthens the case for viewing the latest moves as speculative, giving authorities a “convenient rationale” should they decide to intervene.
Fujishiro believes the likelihood of FX intervention is now rising, with conditions increasingly favourable for Tokyo to step in. He argued that a large-scale, dollar-selling operation could have a meaningful impact, potentially stabilising the yen for “a month or two” by deterring speculative sellers.
The economist played down near-term inflation risks, noting that falling crude prices — with oil now below $60 a barrel — offset some of the import-price pressures normally associated with a weaker currency. That dynamic, he said, may also explain why the government is not signalling deep concern about yen depreciation.
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Japan last intervened in July 2024, buying ¥5.5 trillion over two days after the yen plunged toward ¥162, its weakest level since 1986. That operation briefly pushed the currency back to the ¥157 range, with yen strength continuing through October of that year.
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Fujishiro info via Japan Times.
