The yen is expected to remain weak, despite the narrowing interest rate differential.

Swiss Bank economist David A. Meier stated in a report that the optimism surrounding the Japanese yen benefiting from the normalization of the Bank of Japan's policy and the loose policies of other G10 central banks is fading. Despite the narrowing interest rate differential between Japan and the United States, and with further rate hikes by the Bank of Japan and rate cuts by the Federal Reserve, this difference is expected to continue to narrow, but the yen remains weak with limited upside potential. Meier pointed out that the yen has decoupled from interest rate dynamics recently, reflecting investor concerns about Japan's expansive fiscal position following a change in leadership, as well as the country's high level of public debt being viewed as a risk. He lowered his yen forecast, expecting the USD/JPY to be at 155 yen in three months and 149 yen in twelve months, and added that the yen is unlikely to be a major beneficiary during the weakening of the US dollar process until the end of 2026.