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YEN SENTIMENT IS SO BAD EVEN CURRENT ACCOUNT SURPLUS IS NOT HELPING

ADMIN || 13th January 2026

Financial textbooks would claim that a country with a current account surplus begets a strong currency, but that isn’t working for the yen. Which suggests that investors still need to see additional interest rate hikes from the Bank of Japan, along with direct intervention to support the currency.

Japan’s Finance Minister Katayama and US Treasury Secretary Bessent shared concerns about the weakening yen, but FX traders haven’t heard anything that points to strong action.

Japanese officials may still be deeply scarred from the experience in 2024 when the combination of a BOJ hike and forex intervention drove the yen higher, but crashed the local equity market in the process. There have been two more rate increases since then, but they were telegraphed in advance by messaging to show there is no rush to reach neutral rates.

It looks as though it will be a long road until the yen is back at the top table with G-10 peers.

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