How long before the yen is again a safe-haven bet?
With a shrinking population, even a stagnant GDP means that per-capita incomes are still growing in Japan. If inflation remains positive and interest rates continue to rise, the yen is likely to eventually strengthen.
Until recently, the Japanese yen was a safe haven currency. When shocks like Brexit hit the global market, Japanese investors – the symbolic Mrs Watanabe retail investors – brought their savings back to Japan.
When there was global uncertainty, the yen strengthened, making Japanese exports less competitive. That was despite three decades of low economic growth and structural headwinds like a shrinking and ageing population.
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Shiro Armstrong is a professor and director of the Australia–Japan Research Centre at the Crawford School of Public Policy at the Australian National University.
