Lately, I've been watching the yen trend, and it’s really getting weaker. The USD/JPY is bouncing between 152 and 160, and it’s almost hitting the 160 mark by the end of April, much weaker than at the beginning of the year. I checked the real effective exchange rate, and it’s actually at a 53-year low, which is quite exaggerated.

Why is this happening? Mainly due to a few structural issues. First, the US-Japan interest rate differential has been widening. The Bank of Japan’s rate hike pace is just too slow, now only at 0.75%, while the US is still at a high level. So everyone is borrowing yen to invest in dollar assets, creating heavy selling pressure. Plus, Japan’s new government is pushing fiscal expansion, increasing bond issuance, which raises concerns about fiscal risks. The Middle East situation hasn’t improved either, and Japan’s oil import costs keep rising, all of which are pushing down the yen.

In the short term, the market generally expects June to be the Bank of Japan’s rate hike window. If they actually raise rates to 1%, it could narrow the US-Japan interest rate gap and help the yen a bit. But arbitrage trading will still continue; as long as global risk sentiment remains stable, it’s hard for the yen to strengthen. JPMorgan predicts it could fall to 164 by the end of the year, while BNP Paribas says around 160.

Honestly, for the yen trend to truly reverse, Japan’s internal performance needs to improve. Economic growth momentum must clearly increase, and a healthy “wage-price” cycle needs to be established. In the short term, I don’t see any big turning points; it might continue to consolidate weakly. If you have travel needs, you can buy in stages, but if you want to make money from forex trading, you still need to understand the big picture before taking action.