In 2025, moves away from both the US dollar and the yen were simultaneously in focus, raising attention to the outlook for the dollar-yen exchange rate in 2026. Nomura Securities senior strategist Obata Shuichi (尾畑 秀一) explains the outlook, while the market responded to reports of a possible dissolution with higher share prices and a weaker yen.
In the 2025 market, moves away from the US dollar came into focus amid policy uncertainty, and the yen strengthened against the dollar to the ¥139 range at one point in April. The yen then turned weaker toward the second half of the year, as expectations grew that Japan would be in a rate-hike cycle while the United States would be in a rate-cut cycle, with the Japan-US interest-rate differential expected to narrow.
Obata Shuichi (尾畑 秀一), senior strategist in Nomura Securities' Investment Information Department, discussed the outlook for the dollar-yen exchange rate in 2026, expressing the view that policy and interest-rate trends would create turning points.
On 9 January, reports emerged that Prime Minister Takaichi was considering dissolving the House of Representatives. Nikkei 225 futures rose, and the dollar-yen exchange rate moved toward yen depreciation in the ¥158 range. Share prices continued to rise on the 13th, and the dollar-yen exchange rate remained around ¥158.
Points of focus going forward include the possibility of an early dissolution, approval ratings for the Cabinet and the Liberal Democratic Party, the prime minister's comments on the foreign-exchange market and stance toward intervention, the Bank of Japan's position on additional monetary easing, and the possibility of cooperation between the Liberal Democratic Party and the Democratic Party for the People after the election.