One year has passed since the Takaichi administration was inaugurated, but the yen's depreciation and rising interest rates have continued, with the yen failing to turn higher despite Bank of Japan rate hikes and foreign-exchange intervention. The expansion of the trade deficit and the way policy is communicated have been cited as underlying factors.
One year has passed since the Takaichi administration was inaugurated. The market has seen the emergence of what has been dubbed the “Takaichi market,” marked by yen depreciation and rising interest rates, which is said to have influenced financial conditions since the administration took office. The article looks back at movements in the dollar-yen exchange rate over the past year and examines their background.
The concurrent depreciation of the yen and rise in interest rates are said to have unfolded as the market expected, and the Bank of Japan proceeded with 3 rate hikes. Meanwhile, the effect of foreign-exchange intervention has been described as limited, with the yen failing to turn toward appreciation.
The expansion of the trade deficit accompanying the normalization of crude oil imports is cited as one factor. The deterioration in the trade balance is examined as a factor prolonging pressure on the yen, while insufficient coordination between policymaking and the market response is identified as an issue.