Japan Q&A: Why Has the JPY Depreciated So Much

This report argues that JPY depreciation is driven by a lack of domestic investment compared to the US, rather than interest rate differentials alone. The authors support the administration's focus on public-private investment over immediate monetary tightening to strengthen the yen.

Key Takeaways

• 1.The primary drivers of JPY weakness are the Japan-US interest rate differential and a significant disparity in public-private strategic investment momentum, particularly in AI.
• 2.The government is prioritizing 'Sananomics' (expanding domestic investment) over rapid JPY appreciation, viewing monetary tightening to force currency strength as a policy mistake.

Table of Contents

• Japan Q&A: why has the JPY depreciated so much?
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