Could the weakening of the Japanese Yen trigger consecutive interest rate hikes by the central bank? Experts predict the exchange rate fluctuation range for the year

【CoinPost】The recent views of Citigroup’s Japan market head have attracted attention: if the yen continues to weaken, the Bank of Japan may raise interest rates three times this year, directly doubling the current rate levels.

Specifically, once the USD/JPY breaks through the key level of 160, the central bank is very likely to initiate its first rate hike as early as April, raising the unsecured overnight borrowing rate from 0.5% to 1%. If the yen remains weak afterward, a second rate hike of similar magnitude could occur in July, and there is even a possibility of a third rate hike before the end of the year.

The underlying logic is quite straightforward: the yen’s weakness mainly stems from the suppression of negative real interest rates. To reverse the exchange rate decline, aside from addressing interest rate issues, the central bank has essentially no other options.

From a forecast perspective, experts expect the yen to fluctuate within the 150-165 range this year, slightly below 160. This exchange rate range has a certain signaling effect on global capital flows, especially influencing the attractiveness of emerging markets and risk assets. Changes in macro liquidity often also reflect in capital allocation decisions within the cryptocurrency market.