With the yen¡¯s value hitting its lowest level in 20 years against the U.S. dollar, market participants, observers and policymakers are keenly watching for hints as to whether the yen¡¯s weakness will be short-lived or a prolonged trend.
Some economists say that this weakness is likely here to stay, as Japan is expected to face a chronic trade deficit, putting further downward pressure on the yen.
¡°There are various arguments about whether or not the yen has become structurally weak, but I think we need to approach this issue with the assumption that it is a structural problem,¡± said Daisuke Karakama, chief market economist at Mizuho Bank.
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