Japan Exchange Rate March 2022


Japan: Japanese yen tumbles to near seven-year low against the U.S. dollar

March 25, 2022

The Japanese yen fell sharply in recent weeks, hitting a near seven-year low of 122.0 per USD at the close of trading on 25 March, as the Bank of Japan’s (BoJ) accommodative monetary policy weighed on the currency. As such, the JPY depreciated 5.25% month on month, which follows a more gradual decline in the currency’s value: It depreciated over 9% in 2021 and is 10.5% weaker than it was a year ago.

The sharp depreciation this month has come on the back of the divergent monetary policy stances of the BoJ and the U.S. Federal Reserve, with the latter maintaining a hawkish rhetoric that translated into its first rate hike since late 2018 at its mid-March meeting. Contrastingly, the BoJ kept its rates unchanged at its March meeting and signaled that asset purchases would continue throughout the year, albeit at a gradually reducing pace. This, combined with rising inflationary pressures exacerbated by the energy price spike due to Russia’s invasion of Ukraine in late February—Japan is a net importer of a raft of key commodities—has seen downward pressure on the yen intensify throughout March.

Going forward, the currency looks set to continue falling in the short term, as the Fed pencils in further rate hikes this year, the BoJ sticks resolutely to its accommodative stance, and the government continues to pump stimulus into the beleaguered economy. However, given the tumultuous global geopolitical environment, the safe haven status of the yen should offer some upside support, while potential intervention by the BoJ could occur if the currency falls much further.

FocusEconomics Consensus Forecast panelists project the JPY to end 2022 at 114.8 per USD and 2023 at 113.1 per USD.

Author:, Economist

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