Yen at risk of downward spiral fueled by trade deficit, BOJ easing

Concerns of vicious cycle bring benefits of weak currency into question

20220329N Japanese yen

The immediate cause of the yen's weakness is a split in monetary policy between Japan and the U.S. © Reuters

SETSUO OTSUKA, Nikkei staff writer

TOKYO -- The yen's recent nosedive has heightened fears of a vicious cycle as Japan's worsening current-account balance threatens to spur more selling.

A soft yen was long seen as a boon to Japan's economy. But with the benefits now tilted toward certain exporters and the wealthy while individuals and small businesses feel the pain of higher commodity prices, Japan may need to rethink a fundamental assumption of its economic approach.

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