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Forex

JPY IN STEADY STATE DEPRECIATION

ADMIN || 13th November 2025

Today USD/JPY has traded back through 155 for the first time since January, and Japan’s minister of finance has warned against “one-sided” moves. But the rhetoric feels more routine than reactive and as long as the depreciation remains gradual, we see little risk of imminent intervention.

Finance Minister Satsuki Katayama reiterated Thursday that authorities are monitoring the currency “with a high sense of urgency,” while acknowledging the “negative parts” of yen weakness. Still, her comments echoed those made recently by other officials, offering no fresh signal of escalation. The current shift higher in USD/JPY is uncomfortable, but not yet alarming enough to trigger action. For now, the yen remains caught in a structural bear trend: a casualty of policy inertia, low volatility and global appetite for carry that shows little sign of fading.

The BoJ’s hesitance to decisively address inflation keeps real rates deeply negative, even as Japan records its fourth consecutive year of positive price growth. Prime Minister Sanae Takaichi’s insistence that Japan hasn’t escaped deflation and her willingness to spend reinforce expectations that policy normalization will remain a slow burn.

Low volatility is compounding the pressure. The Bloomberg G-10 carry trade index has gained more than 5% from the April low, with realized vol extremely muted. The calm makes funding trades especially appealing, and every dip in cross-yen pairs is constantly met with fresh buyers. The longer that equilibrium holds, the harder it becomes for Tokyo to break the pattern without a genuine volatility shock.

FX traders are positioning for the yen to extend declines that made it the weakest G-10 currency over the past month, as the US government shutdown appears likely to end today.

The two-week implied volatility for USD/JPY stood at 7.3% on Tuesday, near the 2025 low of 7.06% recorded earlier this month. Since the formation of PM Sanae Takaichi’s administration in late October which advocates continued fiscal stimulus and monetary easing, the yen’s range shifted lower to 150 to 155-level. The downward trend from the summer range of 145-150 yen appears unlikely to reverse.

We had mentioned in our 11th Nov blog "Higher for longer USDJPY" the same theme.

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