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The Bank of Japan’s (BoJ) repeated interventions to bolster the yen have proven ineffective, prompting a need for more substantial policy changes. This could entail lifting interest rates from negative territory, abandoning yield curve control, and discontinuing bond purchases.

Such a policy shift could have a more profound impact on the yen than previous interventions that provided only brief currency boosts, as the maintenance of a super-easy policy promptly reversed these gains.

Consequently, the yen’s trade-weighted value is currently approaching a 50-year low, effectively easing monetary policy and sustaining inflation above the central bank’s target.

Notably, interventions primarily focusing on USD/JPY have not hit the mark, as USD/JPY is the only currency pair where the yen isn’t notably weak. With 360 yen to the dollar in a scenario where the yen’s trade-weighted value is as feeble as it is today, the dollar is evidently weaker than the yen.

This evolving policy landscape underscores the challenges faced by the BoJ in its efforts to manage the yen’s value and achieve its inflation goals.