Lately, I've been focusing on the forecast of the Japanese yen exchange rate and noticed that many friends are asking the same question: Will the yen continue to fall?

Honestly, the performance of the yen over the past six months has been quite poor. Just as 2026 began, the USD/JPY has risen from around 152 at the start of the year to 159, approaching the 160 mark. Even more concerning is that the real effective exchange rate of the yen has dropped to its lowest level in nearly 53 years, which is no small matter.

Why is this happening? I’ve summarized a few main reasons. First is the issue of the interest rate differential between the US and Japan—US rates are much higher than Japan’s, leading to rampant arbitrage trading, with everyone borrowing yen to invest in dollar assets, putting heavy downward pressure on the yen. Second, Japan’s new government has launched large-scale fiscal stimulus measures to boost the economy, but this has also increased the debt burden, causing market confidence in Japan to decline. Additionally, the instability in the Middle East and Japan’s reliance on oil imports have widened the trade deficit, all of which are pushing the yen lower.

The Bank of Japan (BOJ) is also in a tricky position. Market expectations had been for a rate hike in April, but the Middle East conflict disrupted those plans. BOJ Governor Ueda Kazuo clearly stated at the G20 meeting that geopolitical uncertainties are causing ongoing turbulence in global financial markets, and the surge in oil prices is directly impacting Japan’s economy. Therefore, at the April 27-28 meeting, the BOJ is very likely to keep its policy rate unchanged at 0.75%.

Interestingly, June has already become the next critical point. A Reuters survey shows that nearly two-thirds of economists expect the BOJ to raise rates to 1.0% before the end of June. If that happens, the interest rate differential between Japan and the US will narrow, and the yen might have a chance to rebound.

From the perspective of yen trend forecasts, in the short term, the yen should oscillate between 152 and 160. JPMorgan’s strategists believe it could fall to 164 by the end of the year, while Société Générale expects around 160. The common point in these forecasts is that as long as global risk sentiment remains stable, arbitrage trading will continue, making it difficult for the yen to strengthen significantly.

However, I personally believe that in the long run, the yen will eventually return to its proper level. The real turning point depends on internal structural reforms in Japan—sustainable economic growth momentum, a healthy “wage-price” cycle, and a solid foundation for a strong yen.

For friends interested in participating in the forex market, I suggest monitoring key indicators such as Japan’s CPI inflation, GDP, PMI data, BOJ policy moves, and the Fed’s rate cut expectations. Any change in these factors could influence the yen’s trend forecast.

If you need to travel or spend in Japan, consider buying yen in installments; if you want to profit from forex trading, make sure to do your homework based on your risk tolerance. I personally practice on regulated platforms, starting with demo accounts to familiarize myself with the market before considering real trades. Risk management is always the top priority, especially in such volatile market environments.