I've been watching the yen's market lately, and honestly, this wave of depreciation has been quite fierce. From the beginning of the year until now, USD/JPY has been fluctuating between 152 and 160, and by mid-May, it was still hovering around 159. The Bank of Japan seems to be caught in the middle and unable to move. Many people ask me if investing in the yen is feasible; I think first you need to understand why the yen is so weak.

Upon closer inspection, there are several structural reasons behind the yen's continued weakness. The US-Japan interest rate differential is still there—U.S. rates are much higher than Japan's, leading to frequent arbitrage trades—investors borrow low-interest yen to invest in dollar assets, piling up yen selling pressure. Plus, Japan's new government has launched large-scale fiscal stimulus, increasing bond issuance, which raises concerns about fiscal risks and further depresses the yen. The U.S. economy remains relatively stable, with persistent inflation, and the Trump administration’s strong dollar policy is also supporting the dollar index. Meanwhile, Japan’s economic fundamentals are weak—weak consumer spending, import-driven inflation pushing up prices, and real purchasing power under pressure. The Middle East situation has also become a variable; Japan relies heavily on Middle Eastern oil imports, and the blockade of the Strait of Hormuz directly threatens energy security, adding to the downward pressure on the yen.

This raises a question: can the yen be invested in? In the short term, it may not look very optimistic. The Bank of Japan’s policy stance has been cautious; the market initially expected a rate hike by the end of April, but due to the sudden escalation of Middle East tensions, Governor Ueda’s attitude shifted clearly, emphasizing that uncertainties from conflicts keep global financial markets volatile, and soaring oil prices are putting direct pressure on Japan’s economy. Therefore, at the April meeting, the BOJ chose to hold steady, maintaining the policy rate at 0.75%. However, the market has shifted its focus to the June meeting, with expectations for a rate hike increasing to 76%. If the BOJ actually raises rates to 1.0% in June, the narrowing of the US-Japan interest rate gap could attract some arbitrage capital back.

Institutional forecasts vary. JPMorgan’s head of FX strategy in Japan holds the most pessimistic outlook on Wall Street, predicting the yen could fall to 164 by the end of 2026, citing Japan’s weak fundamentals and the lack of a fundamental turnaround next year. Meanwhile, BNP Paribas expects the yen to dip to 160 by year-end, noting that the global macro environment is still relatively supportive of risk sentiment, which generally sustains arbitrage trades. The cautious stance of the BOJ and a potentially more hawkish Fed than expected will keep USD/JPY in a high range.

So, can the yen be invested in? It depends on your view of the long-term trend. In the short term, the yen is likely to continue its weak consolidation, with USD/JPY testing between 152 and 158. If it drops all the way to 160, the likelihood of intervention by Japanese authorities increases, but such measures usually only buy time and are unlikely to fundamentally reverse the trend. The real turning point depends on whether Japan’s internal structural reforms can deliver tangible results—only when economic growth momentum clearly improves and wages and prices enter a healthy cycle can the yen’s strength be genuinely established.

If you ask whether the yen can be invested in, my advice is this: those who need it for travel or consumption can allocate some for future use; for investors aiming to profit from forex trading, it’s essential to consider key factors like BOJ policies, the US-Japan interest rate differential, and global risk sentiment, while also carefully assessing your own financial situation and risk tolerance. If you want to practice trading, consider regulated platforms like Mitrade, which offers over 70 tradable currency pairs and free demo accounts for practice—no need to worry about risking real funds.