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Analysts anticipate weaker Japanese yen in 2026
The Japanese yen stabilized at the beginning of the week following comments from Bank of Japan Governor Kazuo Ueda regarding a potential interest rate hike. The market assessed the probability of a rate increase at the central bank's December meeting at 80%. However, analysts predict that the weakening of the yen, which has been observed for much of 2025, will continue into 2026.
Experts at BofA Securities expect the yen to exceed 160 against the dollar at the beginning of the year before stabilizing at around 155 by the end of 2026. In relation to the euro, the currency is expected to weaken to 190 yen in the first half of the year. This decline is attributed to inflationary economic policies and fiscal risks.
In this context, Prime Minister Sanae Takaichi is preparing a $137 billion stimulus plan dubbed "Sanaenomics." While she supports lowering interest rates, this may create a conflict with the Bank of Japan, which is normalizing its policy. Analysts at ING warn that the stimulus could reignite inflation, prompting the central bank to raise rates and raising concerns about fiscal sustainability, which could further weaken the yen amid tightening investment conditions.
Published 12 December 2025
© InstaFintech Group
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© InstaFintech Group
