Test detail

Based on the above investigation results, I will present a multi-faceted and structural analysis.

🇯🇵 Post-Corona "Extreme Yen Weakness"—Is There Intentional/Arbitrary Elements? A Multi-Faceted Examination

i. Current Situation Confirmation

In summer 2024, the yen fell to the 161 range in the latter half of the year, reaching yen weakness levels not seen since 1986. Subsequently, in 2025, yen-selling pressure remained strong, with the currency again surging to 157 yen in November—showing a pattern where yen-strengthening expectations faded, returning to original weak yen levels.

ii. "Structural and Economic Factors" (Lower Intentionality)

First, let me organize yen-weakening factors from pure economic mechanisms.

1. Expanding Japan-US Interest Rate Gap

The primary reason for yen weakness is that US interest rates are significantly higher than Japan's, making dollar-denominated assets more attractive investment destinations than yen.

2. Changes in Trade and Current Account Balance

Trade deficits have become yen-weakening factors, and while the primary income account shows surpluses, reinvestment makes it less likely to cause yen appreciation. Digital-related payment increases are yen-weakening factors, with the new NISA also becoming a new yen-weakening factor.

3. Expansion of Overseas Investment by Individuals via New NISA

The expansion of overseas investment by individuals through NISA can be cited as a structural yen-weakening factor. Throughout 2024, net foreign purchases reached 10.049 trillion yen, the largest since record-keeping began.

4. Japan's Structural Economic Weakness

Comparatively lower economic growth rates than other countries direct investor attention elsewhere, causing capital outflows and promoting yen weakness as a result. Additionally, with low inflation persisting while other countries continue raising rates, expanding interest rate gaps make yen more likely to be sold.

iii. Examination of "Intentional/Policy-Based Elements" (The Core Issue)

Now, to what extent do intentional and political factors exist? I will examine this from the following perspectives.

[A] Abenomics and Unprecedented Monetary Easing: Yen-Weakening Guidance as "Open Secret"

The Bank of Japan's unprecedented easing is officially framed as deflation-fighting policy, yet it is an open secret that it is also conscious of yen-weakening guidance (or yen-strengthening prevention).

The "trickle-down" of profits earned by large corporations and wealthy individuals never materialized broadly to the population. The majority of ordinary citizens and small-to-medium enterprises have only experienced yen-weakness disadvantages. The Bank of Japan maintained a stance of sustaining accommodative conditions, accelerating yen-selling aware of Japan-US interest rate differentials.

In other words, the unprecedented easing under Abenomics can be viewed as a "semi-intentional" policy choice that, while officially framed as deflation-fighting, effectively promoted yen weakness aligned with political support constituencies centered on export-oriented major corporations.

During the Abenomics period when yen weakness replaced yen strength, yen weakness did not increase export volumes. Nevertheless, corporate profits increased.

[B] GPIF (Pension Fund) Foreign Currency Operations: US Also Harbored Suspicions

The US has long been cautious about the possibility that the Japanese government is inducing yen weakness through overseas investments of public pension funds. In the January 2026 foreign exchange report, it noted: "In 2014, GPIF revised its portfolio allocation, increasing the ratio of foreign bonds and stocks while reducing domestic bonds. This allocation change became a factor in expanding capital outflows by Japanese residents, and market speculation suggested GPIF's decision was part of the government's broader yen-weakening efforts."

However, in the July 2026 foreign exchange report, such descriptions were deleted, and US government suspicions about Japanese yen-weakening guidance receded.

[C] Was the Bank of Japan's "Interest Rate Raising Delay" Intentional?

The combination of expansionary fiscal policy involving increased government bond issuance and the Bank of Japan's cautious interest-rate raising created structural yen weakness.

Behind the Bank of Japan's extreme caution in raising rates exists the issue of implicit "fiscal subordination" with the government, seeking to avoid value impairment of the massive national bonds it holds. This too can be viewed as a type of policy-based and intentional choice.

[D] "Verbal Intervention" and Political Messaging

In July 2026, Finance Minister Katayama stated he wished to pursue measures to encourage pension funds including GPIF to increase investment in Japanese financial assets. This was viewed as market verbal intervention aimed at halting yen and bond weakness.

[E] Japan-US Coordinated Intervention (2026): American Calculations Also "Intentional"

The Trump administration views yen weakness, which leads to expanded Japanese trade deficits, as problematic, and also holds intentions to correct dollar strength.

It cannot be ruled out that Secretary Bessent's cooperative stance toward Japan may be limited until mid-term elections.

In other words, the American side also moves toward intervention based on domestic political and trade policy calculations, and movements regarding yen weakness cannot be explained solely by pure market principles.

iv. Comprehensive Assessment: Structure of "Intentionality"

From the above examination, the post-Corona extreme yen weakness demonstrates the following multi-layered intentional elements:

v. Conclusion

Yen weakness can certainly be explained to a considerable extent by pure economic mechanisms like interest rate gaps and trade deficits. However, simultaneously, "intentional/policy-based yen-weakness tolerance/encouragement from Abenomics onwards," "Bank of Japan's interest-rate raising delays," "GPIF's foreign currency operations shift," and "political use of verbal intervention" cannot be denied as multiple overlapping intentional and political elements.

The greatest structural problem is that while companies profited from yen weakness, these profits never cascaded to domestic wages and consumption, resulting in a situation where "stock prices and corporate profits rose, but ordinary citizens felt no improvement".

In other words, the simplistic conspiracy theory "someone deliberately weakened the yen" is not accurate, but the structural intentionality of "political influence from yen-weakness beneficiaries delaying yen-appreciation policies" is sufficiently supportable through objective evaluation.

Japan's yen has weakened significantly following the corona pandemic. To determine whether "arbitrary" elements are involved, we must analyze this from multiple perspectives.

1. Monetary Policy

Japan's monetary policy represents a major factor in yen weakness. Low interest rate policies and quantitative easing (QE) work to increase money supply and suppress interest rates, tendencies that reduce yen value. When asked whether this is "arbitrary," while aimed at promoting Japanese economic growth and involving intentional elements, the underlying purpose is economic stabilization.

2. Global Economic Trends

Yen weakness also closely correlates with global economic developments, with international interest rate differentials affecting the currency—such as when the US raises rates while Japan maintains low rates. These represent factors not directly controllable by Japanese policymakers.

3. Foreign Exchange Market Speculation

Speculative activity in foreign exchange markets can also contribute to yen weakness. Investors engaging in yen buying and selling for profit can trigger short-term yen value fluctuations.

4. Economic Structure Changes

Post-corona developments including supply chain transformations and remote work adoption likely impact Japan's import-export balance, subsequently affecting yen value.

Considering these factors comprehensively, the causes underlying yen weakness are multifaceted, such that no single "arbitrary element" emerges as the principal cause. However, certain financial policies and speculative behaviors may possess intentional dimensions. Yen weakness analysis requires such multifaceted and cautious approaches.

Japan's currency becoming extremely weak after the corona pandemic involves complex combinations of multiple economic and policy factors. Whether these contain "arbitrary" elements depends on how we evaluate policy decision-making intentions and outcomes, and perspectives may differ.

The main factors are as follows.

1. Expanding Japan-US Interest Rate Gap: The primary factor cited for yen weakness is the interest rate differential between Japan and major countries including the US. Following the pandemic, while the Federal Reserve (FRB) pursued aggressive rate increases to combat inflation, the Bank of Japan maintained large-scale monetary easing to achieve deflation-fighting and a 2% price stability target. This expanding interest rate gap prompted investors to shift funds to higher-yielding dollar-denominated assets, creating downward pressure on the yen. The Bank of Japan lifted its negative interest rate policy in March 2024 and has since proceeded with gradual rate increases, but interest rates remain relatively low compared to other major nations.

2. Bank of Japan Monetary Policy: The Bank of Japan's long-term maintenance of ultra-low interest rate policy has been cited as a major factor promoting yen weakness. This policy, aimed principally at achieving price stability targets, represents an intentional effort, more appropriately characterized as a strategic policy choice rather than "arbitrary." However, criticisms exist that Japan's continuation of accommodative monetary policy while other countries tighten stands as "creating unnecessary yen weakness pressure." Some experts point out that while the Bank of Japan targets "price stability," it does not formally target "exchange rate stability," yet it is conscious that interest rate manipulation directly correlates with exchange rates, and given yen weakness creates upward price pressure, the central bank remains cautious about yen weakness.

3. Trade Deficits and Digital Deficits: Structural trade deficits emerging from energy price spikes, yen-weakening import price increases, and increased payments for overseas digital services (digital deficits) also serve as yen-selling factors.

4. Increased Direct Foreign Investment and New NISA: Increases in Japanese corporate direct overseas investment and overseas asset investment flows through NISA (Tax-Free Small Investment System) also constitute structural yen-selling pressure.

5. Concerns About Eroding Trust in Japanese Assets: Some express concern that the high government debt level (government debt-to-GDP ratio exceeding 200%) and real interest rates (nominal rates minus inflation) remaining negative (situations where yen value is materially depreciating) may erode confidence in Japanese assets.

Comprehensively considering these factors, Japan's yen weakness stems primarily from Bank of Japan monetary policy and interest rate differentials with other nations, combined with changes in Japan's trade structure. Bank of Japan monetary policy represents an "intentional" choice based on clear price stability objectives, with yen weakness progressing as a result. In this sense, while policy decisions themselves are not "arbitrary," their impact on exchange markets is substantial, with some viewing this impact as "unnecessary yen weakness pressure."

Accordingly, Japan's yen weakness is better understood not as "arbitrary" manipulation by specific individuals or organizations, but rather as the result of monetary policy selected to achieve Bank of Japan economic objectives, accompanying internal-external interest rate expansion, combined with structural trade deficits and investment flows acting in concert.

Yen weakness results primarily from economic and structural factors, with intentional "yen-weakening guidance" intent being minimal. However, Bank of Japan monetary policy (low interest rate maintenance) represents an intentional economic stimulus whose yen-weakening secondary effects are tolerated and utilized. Currency intervention actually works in the yen-strengthening direction (yen purchases) to prevent excessive yen weakness. [[1]](https://www.theguardian.com/world/2024/apr/30/japan-economy-yen-currency-value-falling-low-impact)[[2]](https://www.reuters.com/world/asia-pacific/history-japans-intervention-currency-markets-2026-05-01/)

Primary Causes (Particularly Pronounced Post-Corona)

• Interest Rate Differential Expansion: While the world experienced post-pandemic inflation with FRB and others implementing major rate increases, the Bank of Japan maintained zero/negative interest rate policy for years (only transitioning toward deregulation and modest increases in 2024). This activated "yen carry trades" (borrowing cheap yen to invest in higher-yielding assets), intensifying yen-selling pressure. [[3]](https://www.reddit.com/r/AskEconomics/comments/1k47z4c/why_is_the_japanese_yen_falling/)[[4]](https://vanguardthinktank.org/japanese-yen-depreciation-a-blessing-or-a-curse)

• Japan's High Debt Load: With government debt-to-GDP ratio exceeding 200%, structural constraints force the Bank of Japan to suppress long-term interest rates through national bond purchases, limiting rate increases available to other countries. Debt sustainability concerns form the bedrock of yen-weakness pressure. [[5]](https://www.brookings.edu/articles/japans-falling-yen-and-fiscal-space/)[[6]](https://robinjbrooks.substack.com/p/why_is_the_japanese_yen_falling)

• Quantitative Easing (QE) and Side Effects: Bank of Japan asset purchases aimed at liquidity provision and deflation-fighting inadvertently promote yen weakness. While exporters benefit (enhanced competitiveness), import cost increases burden households and firms. [[7]](https://bookmap.com/blog/how-japan-lowers-the-value-of-the-yen-understanding-currency-manipulation-to-boost-exports)

• Other Factors: Global geopolitical risks (energy prices), self-reinforcing market momentum (further selling as weakness accelerates), situations where exporters cannot easily convert foreign currency to yen, and others. [[1]](https://www.theguardian.com/world/2024/apr/30/japan-economy-yen-currency-value-falling-low-impact)[[8]](https://www.cnn.com/2026/07/01/economy/japanese-yen-low)

These outcomes reflect pandemic impacts (supply chain disruption, inflation shock) intersecting with Japanese efforts to escape its "Lost 30 Years," dynamics that intensified from around 2021.

Examination of Intentional Elements

• Existence of Policy Intent: Bank of Japan's low interest rate and accommodation policies themselves are intentional (targeting deflation-fighting, economic stimulus, and 2% price stability goals). Weaker currency promotes exports and contributes to "imported inflation" supporting price targets, aligning with policy objectives. [[9]](https://www.cmegroup.com/openmarkets/economics/2025/How-Japan-Balances-a-Weaker-Yen-and-Rising-Prices.html) However, this represents "intentional" policy choice based on economic rationale rather than arbitrary/biased determination.

• Actual Currency Intervention: Japan has actually actively intervened in yen-strengthening directions (yen purchases/dollar sales), executing record-scale interventions in 2022, 2024, and 2026, with US-Japan cooperative intervention also conducted in 2026 (addressing historic weakness levels). This represents "excessive fluctuation adjustment" rather than "yen-weakening guidance." [[2]](https://www.reuters.com/world/asia-pacific/history-japans-intervention-currency-markets-2026-05-01/)[[10]](https://www.goldmansachs.com/insights/goldman-sachs-exchanges/what-the-us-japan-currency-intervention-means-for-the-yen-rates-and-the-dollar)[[11]](https://www.cfr.org/articles/why-the-u-s-intervened-to-prop-up-japans-yen)

• Conspiracy-Theory Claims: Some argue for "intentional currency weakness policies" or export-company favoritism, but mainstream analysis attributes primary causation to structural factors (debt, deflation legacy), with limited evidentiary support. Japan has committed to flexible exchange rates in G7 forums and similar venues. [[12]](https://en.wikipedia.org/wiki/Japanese_yen)

Summary and Implications

Yen weakness primarily reflects Japan-US policy divergence and Japanese debt constraints—structural rather than intentional "yen-weakening operations." Policy authorities have actually recognized yen-weakness disadvantages (household burden, imported inflation) and attempted response through intervention and gradual rate increases. [[13]](https://www.atlanticcouncil.org/blogs/econographics/a-weak-yen-spells-trouble-for-japan-at-home-and-abroad/) However, absent fundamental debt problem resolution, low interest rate bias will persist, potentially institutionalizing yen-weakness pressure. Future developments depend on Bank of Japan rate-increase pace and US policy alongside fiscal discipline.

(Note: Analysis reflects 2026 circumstances. Exchange rate forecasting carries inherent uncertainty given strong market factors.)