Yen depreciation | S&P maintains Japan's rating, warns of downgrade if yen plunges further

SighingCashier · 2026-03-30T08:50:29+00:00

S&P maintains Japan's sovereign debt rating at A+/A-1 but warns that a significant depreciation of the yen and worsening economic competitiveness could lead to a downgrade. Although Japan's GDP and fiscal revenue remain resilient, deficits may widen over the next two years. The market is closely watching the key 160 level of the yen against the US dollar.

SighingCashier

2026-03-30 08:50:29

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S&P maintained Japan’s sovereign debt rating but indicated that it might downgrade the rating if the yen weakens significantly further, reflecting a continuous deterioration in the country’s economic competitiveness.

S&P affirmed Japan’s A+/A-1 rating, as despite facing geopolitical risks, Japan’s nominal Gross Domestic Product (GDP) and fiscal revenue growth are expected to remain resilient. However, due to increased spending on investment and stimulus measures, Japan’s fiscal deficit may widen over the next two years.

S&P pointed out that if Japan’s economic growth continues to be significantly lower than that of other high-income economies, and if the yen weakens significantly further, reflecting a continuous deterioration in Japan’s economic competitiveness, it may downgrade Japan’s rating.

The yen briefly fell to 160.46 against the dollar earlier. The rise in oil prices due to tensions in Iran has exacerbated inflation concerns, causing the yen and Japanese government bonds to decline. The market is focused on the key level of 160, as authorities intervened around this level in 2024.

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