The recent decline of the Japanese Yen is truly disheartening—three years ago, 1 million Yen could exchange for over 60,000 RMB, now it’s only about 45,000, with the devaluation rate astonishingly high. The Bank of Japan just announced its first interest rate hike in 30 years to 0.75%, which should have been a positive signal, but instead became a paradox: the USD/JPY exchange rate directly broke through 157.76, and the RMB hit a historic low. This is the so-called "rate hike anti-appreciation" curse.

Why can’t rate hikes save the situation? The core issue is actually quite painful. First, the central bank’s stance is indeed ambiguous—talks about raising rates, then quickly emphasizes "continued easing policy," and this wavering itself weakens the credibility of policy signals. Second, a 25 basis point increase is too small to narrow the interest rate gap with the US and Europe, making it even less effective amid high inflation. Most critically, fiscal policy is also undermining efforts—an additional 18.3 trillion budget is entirely financed by debt issuance, with debt-to-GDP ratio exceeding 215%. The market sees clearly that this isn’t something monetary policy can solve alone, so the risk premium on the Yen continues to rise.

Intervention measures have also been attempted, but they only treat the symptoms, not the root cause. What’s truly eroded is the credibility of Japan’s central bank system. On the corporate level, there are efforts to hedge and self-rescue, but from a macro perspective, the Yen’s outlook depends on several key factors—whether fiscal discipline can truly constrain itself, whether monetary policy can act independently, and whether industrial upgrading can generate real growth. If these three can form some positive feedback loop, there’s hope to reverse the situation. Otherwise, a weak Yen isn’t just short-term volatility but the beginning of chronic bleeding, which also has significant spillover effects on global liquidity and the crypto markets.