While USD/JPY's four-decade lows drew headlines, Japan's nominal effective
exchange rate — a trade-weighted yen index — has fallen to fresh YTD lows,
reflecting weakness versus the euro, pound sterling and several Asian
currencies. Broad yen depreciation raises imported inflation (inf) risks and
erodes Japanese purchasing power, boosting import costs across multiple trades
partners and complicating the Bank of Japan's path to policy normalization
without harming the recovery. Robeco senior portfolio manager Ugo Lancioni said
the yen's value is deteriorating against a basket of currencies and may require
stronger FX intervention, potentially combined with other measures, to be fully
effective.
