Yen’s Weakness: A New Hope for Japan’s Economic Revitalization

Japan's economy stands to benefit from the yen's current weakness, according to economist Takuji Aida, who advises the policy group supporting premier hopeful Sanae Takaichi. Despite rising import costs, Aida argues that the effect can be mitigated through assertive fiscal spending.

Aida dismisses concerns that such spending might further weaken the yen and increase inflation, instead suggesting that a weaker yen is simultaneously boosting stock prices and investor confidence in Japan. He notes that the favorable exchange rate could drive domestic manufacturing and buffer against U.S. tariffs.

On monetary fronts, Aida predicts the Bank of Japan will maintain its interest rates until 2027, with a minor hike expected early next year. He foresees a resurgence in domestic demand, spurred by proactive fiscal policies, prompting gradual rate increases.

(With inputs from agencies.)