Yen Expected to Rebound from Record Low

The Japanese yen has fallen to a 40-year low due to concerns over Japan's fiscal soundness and the acceleration of the Japanese policy rate hike.

According to LS Securities, the yen's value will quickly normalize in the second quarter of next year.

The research center pointed out that the weak yen in the future is a reduction in consumption tax rates and concerns over tax revenues. The Japanese government has decided to cut the food consumption tax rate from 8% to 1% for two years from April 2027.

However, the yen is expected to strengthen considering the Bank of Japan's accelerated policy rate hike. Woo Hye-young, a researcher at LS Securities, explained that this increase will contribute to the yen's appreciation because policy adjustments are being made under a desirable macro environment, such as solid growth and increased risks of upward base prices.