Be prepared for Japan’s exit from cheap money

The BoJ faces a dilemma in containing a sharp depreciation of the yen while not causing significant disruption to global financial markets. — Bloomberg

THE Japanese yen recently hit 150 against the US dollar, the market psychological threshold, which also marks the weakest level not seen since August 1990. That was the level that market investor thought could prompt Bank of Japan (BoJ) to intervene to prop up the currency, to be accompanied by its exit of super easy monetary policy.

Since the US Federal Reserve’s (Fed) rate hike cycle started in March 2022, the yen is the worst performing currency, down by 18.7% against the US dollar from March 2022 to Nov 8.