The Japanese yen saw a significant depreciation on the back of central bank intervention as well as geopolitical stress. In the view of economists at the National Bank of Canada, the JPY could remain subdued for some time.

BoJ at war 

“Inflation in the island nation has started to creep up and could mark a challenge to the dovish stance of the central bank.”

“The 125 level is thought to be by the central bank a high-water mark in terms of potential damage for the Japanese economy.”

“Our vision for the Japanese currency is one that could remain subdued for some time. Especially in a context of yield-curve control and easy money while inflationary pressures are present and central banks globally are on tightening trajectories. The BoJ will need to strike a balance between protecting its 10y yield whilst managing a depreciating currency.”