What does a weak yen mean for Japan's economy?

The Japanese yen slumped to a 34-year low. What does a weak yen mean for inflation, interest rates and tourism in Japan?

Kabukicho, Tokyo
(Image credit: DuKai photographer)

The Japanese yen has sunk to a 34-year low, trading as low as ¥160 to the dollar on Monday. Japan’s currency has shed more than a third of its value over the past three years, says Jonathan Yerushalmy in The Guardian. The Bank of Japan (BoJ) has held interest rates “extraordinarily low”, even as they rise in other countries. It finally raised them in March – the first hike in 17 years – but only to just over 0%. 

At a meeting last week, the BoJ held rates steady, signalling that it is in no rush to hike again and precipitating “another round” of yen selling. Currency traders have finally realised “that Japan is following a policy of benign neglect for the yen”, says George Saravelos of Deutsche Bank

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Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.