In Tokyo, Japan, the real-time exchange rate of the Japanese yen against the US dollar is displayed on the big screen of a foreign exchange brokerage company. On that day, the exchange rate of the yen against the US dollar hit a 20-year low. The exchange rate of the Japanese yen against the US dollar once fell below the 1 mark to 129 yen, the lowest since May 2002.
This has been the continuous decline of the yen 14 days. According to the Nikkei Currency Index compiled by Nihon Keizai Shimbun, the exchange rate of the Japanese yen ranked second in the first quarter of this year with a decline of 5.7%, second only to the Russian ruble. The Nihon Keizai Shimbun estimates that Japan, as a big exporter, may have its first current account deficit in 42 years. If the yen continues to weaken and the price of crude oil rises to $ 130 per barrel, Japan's current account deficit will reach 16 trillion yen in fiscal year 2022. What happened to the yen after such a sharp fall?
This is the Japanese yen and US dollar banknotes photographed in Tokyo, Japan on April 20th, 2022. Three factors caused the yen to plummet. In fact, this year, the yen has been declining in the depreciation channel. This is the result of three factors. First, the Bank of Japan adheres to an infinitely loose monetary policy. Haruhiko Kuroda, governor of the Bank of Japan, believes that deflation is the biggest risk of Japan's economy. Unlike other countries, unrestricted easing will not cause hyperinflation. For the exchange rate of the US dollar against the Japanese yen, Haruhiko Kuroda set an upper limit earlier-1:125, which is the so-called "Kuroda defense line".
On the big screen of a foreign exchange brokerage company in Tokyo, Japan, the real-time exchange rate of the yen against the US dollar is displayed. There are different views in Japan. Bank of Japan Governor Haruhiko Kuroda is not worried about the current sharp depreciation of the yen, but there are other views in Japan. Japanese Finance Minister Suzuki Shunichi believes that the depreciation of the yen has its advantages, but in the current environment, the weakness of the yen also has a strong negative impact. The so-called current environment refers to the soaring prices of international crude oil and raw materials, and the weak yen has pushed up import prices, broadened the channels for imported inflation and increased the costs of Japanese enterprises.