Reversing Japan’s weak yen trend will take many years

Significance Record yen weakness explains this gap. The real trade-weighted yen lost over 7% in January-June. It then strengthened by over 8% in July and August following a second rate rise and central bank intervention, but has changed little since. Impacts The zero-interest rate policy hit the yen, aided exports and raised import prices; policy and the yen trend may have shifted permanently. Households and firms will increasingly see high import prices as a yen weakness problem more than lower export prices as a benefit. Trade statistics mask enormous changes in the structure of trade in recent decades, such as the composition of Japan’s trade with China.