On December 3, the yen exchange rate fluctuated within a narrow range. On the Tokyo foreign exchange market that day, the yen closed at 0.045390 against the RMB, a slight increase of 0.02% from the previous trading day. During the session, it hit a high of 0.045450 and a low of 0.045360, with a fluctuation range of less than 0.02%, indicating that the market has divided opinions on the short-term trend of the yen. From the perspective of the overall annual performance, the yen has shown an obvious trend of “early rise and late fall”. In mid-April, the yen-dollar exchange rate once rose to a phased high of 140.9:1, and then began a continuous depreciation trend. So far, it has fallen to 155.88:1, with an annual depreciation rate of more than 10%, ranking at the bottom among major developed economy currencies. The core driver of the yen’s depreciation is the loose monetary policy implemented by the Japanese government. After taking office, Prime Minister Sanae Takaichi promoted the Bank of Japan to maintain the policy interest rate at an ultra-low level of -0.1% and continued to expand the scale of government bond purchases, resulting in a high interest rate differential of more than 3 percentage points between Japan and the United States, triggering arbitrage transactions where speculative capital sells the yen and buys the U.S. dollar.
In sharp contrast to the weak performance of the yen, most major emerging market currencies in Asia have shown an appreciation trend during the year, with obvious differentiation in exchange rate trends. Among them, the Singapore dollar has appreciated by 5.4% against the U.S. dollar this year, mainly due to the Monetary Authority of Singapore maintaining currency competitiveness through tightening monetary policy, while Singapore, as a regional financial center, has attracted a large inflow of international capital; the Thai baht has appreciated by 7.2% against the U.S. dollar, with the strong recovery of the tourism industry driving a significant increase in foreign exchange earnings. From January to November, the number of inbound tourists to Thailand has recovered to 112% of the same period in 2019, and tourism foreign exchange earnings reached 68 billion U.S. dollars, an increase of 45% compared with last year; the Malaysian ringgit has performed the most prominently, with an annual increase of more than 8.2% against the U.S. dollar.
On the one hand, this is due to the increase in Malaysia’s crude oil export earnings; on the other hand, it is because the government’s preferential policies for foreign investment have attracted a large amount of manufacturing investment. The difference in exchange rate trends essentially reflects the differentiation of economic fundamentals among Asian countries. Japan’s economy is facing deflationary pressures and structural predicaments, while some Southeast Asian countries have achieved rapid recovery relying on their own industrial advantages. This difference is expected to continue in 2026. Market analysts point out that if the yen-dollar exchange rate breaks through the 160:1 mark, the Japanese government may intervene in the foreign exchange market. However, the current Takaichi government focuses more on economic growth, and the possibility of tightening monetary policy in the short term is low.
