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HFM’s Outlook 2023: Japan and the Yen

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Japan and the Yen – 2023 Outlook

The Japanese Yen was the weakest currency in 2022 because of the Bank of Japan’s commitment to maintaining a loose monetary policy, effectively widening the Yield differentials with other major economies – particularly the US. The Federal Reserve was, however, the most hawkish of the major central banks. It raised interest rates to the maximum range of 4.50%. USDJPY surged to 32% in October 2022. But, the Federal Reserve was the most hawkish of all the major central banks, raising interest rates to the upper band of 4.50%. The Fed became less hawkish in the final 2 months of 2018, slowing down the pace of rate rises. 

The markets will be watching for signs that the BOJ will continue to support massive monetary stimulus, low interest rates and low inflation going forward into 2023. This is especially true after Governor Kuroda said that he had no plans to raise rates despite other Central Banks increasing their rates rapidly to combat rising inflation.

In April 2023, Haruhiko Kuroda will step down after his 10-year tenure as Governor of the Bank of Japan and a new Governor will emerge – Deputy Governor Masayoshi Amamiya and former Deputy Governor Hiroshi Nakaso are currently tipped as the forerunners. Kuroda demonstrated strong commitment during his time as governor…



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