Japanese yen exchange rate

The Japanese yen is estimated to reach an exchange rate of 150.0 yen per US dollar in 2026, reflecting a slight depreciation following a one-year return to appreciation in 2025. This change is influenced by temporary support actions under the Trump Administration, yet the currency remains weaker compared to pre-2022 levels. Continued volatility and international monetary policies persistently affect the yen.

From 2021 to 2026, the yen's exchange rate was impacted by various macroeconomic and market factors. At the onset of the current period, a pandemic-induced surge in Japan raised recovery concerns, reinforcing the yen's safe-haven status. However, this was offset by the US Federal Reserve's aggressive tightening in 2022 to combat inflation, leading to the yen's depreciation to a 20-year low. The yen continued to weaken against the US dollar in 2023 and 2024 due to divergent monetary policies and economic performance between Japan and the US. However, the yen began to slightly grow in comparative value to the US dollar in 2025 as the Bank of Japan tightened its monetary policy and growth in the US dollar index slowed. Still, the yen is set to return to depreciation in 2026 as the gap between the two central banks' interest rates remains largely in the Federal Reserve's favor.

Domestic factors also influenced the yen. Consumer spending and investments supported Japanese GDP in the early period, aiding stability despite restrictions. However, Japan's persistently low interest rates encouraged capital outflows as investors sought higher returns abroad, contributing to currency depreciation. Japan's weak economic recovery relative to other major economies further impacted the yen's appeal.

Cross-border capital flows, global economic uncertainty and investor risk appetite also affected the yen. Although the yen experienced periodic demand spikes during global instability, these were insufficient to counteract depreciation caused by policy divergence and economic underperformance.

Over the five years to 2026, the yen experienced significant year over year depreciation despite a one-year slightly downturn in the exchange rate. Sensitivity to policy adjustments, recovery rates between economies and safe-haven dynamics have been significant in shaping the yen's value.