Rabobank’s Senior Macro Strategist Bas van Geffen discusses renewed Japanese Yen (JPY) weakness following recent joint US-Japan FX intervention that briefly pushed USD/JPY below 156. He highlights Japan’s planned food sales tax cut and household handouts, noting funding uncertainties and criticism from markets and politicians. He stresses that these measures do not structurally improve Japan’s growth, leaving the Yen lacking durable support.
Fiscal plans and FX intervention
“Days after the Japanese Ministry of Finance –and the US Treasury– intervened in FX markets to prop up the yen, the cabinet approved a plan to cut the sales tax on food for two years. On top of that, the government is planning handouts to lower-income households. High costs of living are weighing on PM Takaichi’s popularity.”
“The tax cut costs JPY 4 trillion (around 0.6% of GDP) in lost revenues annually,…
