Source: Fortune
Summary
Japan’s yen is near 40-year lows, down 3.6% in 2026 and 11% from last year. Fears of inflation and the Bank of Japan’s rate hikes are contributing to the decline. Prime Minister Sanae Takaichi’s plans for more deficit spending are adding to the pressure. Robin Brooks, a senior fellow at the Brookings Institution, warns that Japan’s massive debt, which has ballooned to 240% of GDP, is suppressing bond yields and obscuring the debt-crisis risk. Brooks predicts the yen will eventually sink to 170 per dollar.
Our Reading
The numbers tell one story.
The yen’s slide continues despite Tokyo’s intervention, with the currency down 0.58% at 162.30 per dollar. The Bank of Japan’s rate hikes and Prime Minister Sanae Takaichi’s deficit spending plans are adding to the pressure. Robin Brooks warns that Japan’s massive debt is suppressing bond yields and obscuring the debt-crisis risk. The yen’s depreciation is also exacerbating inflation and making imports more expensive. Brooks predicts the yen will eventually sink to 170 per dollar. The situation is a “quiet implosion” that markets are misinterpreting as a gradual weakening.
Author: Evan Null
