Yen Exposed: Persistent Trade and Capital Flows Weigh on Currency

The Japanese Yen remains vulnerable to further depreciation due to persistent trade and capital flow dynamics, according to a recent analysis from BNY.

BNY pointed out that Japan's trade balance and cross-border investment flows continue to weigh on the currency. This is because despite occasional intervention by Japanese authorities, the underlying flow dynamics - particularly large outflows from Japanese investors seeking higher yields abroad - keep the yen under structural pressure.

This means that any official action may only provide temporary relief, but will not address the fundamental flow imbalance.