The yen has been significantly under pressure. Nonetheless, if it becomes foreseeable that the Federal Reserve will lower its key rate again in 2023, Japan's currency has recovery potential, according to economists at Commerzbank.

When will the yen depreciation end?

“We expect the interest rate outlook for other G10 central banks to stay elevated in the near term, keeping the yen under depreciation pressure.”

“Quite quickly, however, the USD/JPY trend is likely to reverse again. As the probability of a US recession increases, the realization that the Fed will have to cut its key rate again in the foreseeable future should increasingly mature.

”We expect the USD/JPY exchange rate to stabilize even without MOF intervention and the yen to recover moderately once a US recession and falling US interest rates are going to be more widely expected.”