The head of Japan affairs at the International Monetary Fund said that there is no reasonable level of exchange rate. The yen exchange rate has always fluctuated, and the Japanese authorities are committed to implementing a flexible exchange rate system. The yen exchange rate is determined by market forces, and we believe that there is no such thing as a reasonable level of the nominal exchange rate of the yen. If we see that the yen continues to depreciate over a longer period of time, we should see an increase in the transmission effect of higher import prices on overall inflation. In our forecast, we assume that the Bank of Japan will raise interest rates twice this year and raise interest rates again in 2027.

The head of Japan affairs at the International Monetary Fund said that there is no reasonable level of exchange rate. The yen exchange rate has always fluctuated, and the Japanese authorities are committed to implementing a flexible exchange rate system. The yen exchange rate is determined by market forces, and we believe that there is no such thing as a reasonable level of the nominal exchange rate of the yen. If we see that the yen continues to depreciate over a longer period of time, we should see an increase in the transmission effect of higher import prices on overall inflation. In our forecast, we assume that the Bank of Japan will raise interest rates twice this year and raise interest rates again in 2027.