With the yen’s value hitting its lowest level in 20 years against the U.S. dollar, market participants, observers and policymakers are keenly watching for hints as to whether the yen’s weakness will be short-lived or a prolonged trend.
Some economists say that this weakness is likely here to stay, as Japan is expected to face a chronic trade deficit, putting further downward pressure on the yen.
“There are various arguments about whether or not the yen has become structurally weak, but I think we need to approach this issue with the assumption that it is a structural problem,” said Daisuke Karakama, chief market economist at Mizuho Bank.
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