Japanese Yen has eased by 22% against the greenback since the start of 2022. Is JPY depreciation of 22% little or a lot? Economists at Commerzbank analyze the JPY performance this year.

If the Fed cut its key rate again in 2023 things can move in the opposite direction again quite quickly

“The rate disadvantage of the Yen became dramatic this year, and in view of that development, its performance on the FX market was not excessive. Quite the contrary. Instead, things could have developed very differently, as there is a lot to suggest that at least a considerable share of the rate disadvantage of the Japanese currency will remain in place long term.”

“Of course that does not mean for the coming year that the Yen has to depreciate further. If – as the market is currently expecting – the US central bank Fed will cut its key rate again in 2023 things can move in the opposite direction again quite quickly.”