Analysts at Barclays say the yen is likely to remain under downward pressure in the coming quarters, outlining 3 reasons:

  1. First the Bank of Japan (BoJ) lags monetary policy normalisation amid relatively contained domestic inflation despite global stickingflation driving hiking cycles elsewhere, resulting in widening yield differentials
  2. Second, as COVID-induced safe-haven dominance of the USD fades in favour of JPY's safe-haven revival, the yen should face headwinds so long as a positive global risk backdrop remains.
  3. Third the yen's negative FX supply-demand continues to weigh on the currency with the ongoing capital outflows via external portfolio and direct investment and negative terms-of-trade impact of heightened oil prices

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