The Japanese Yen has fallen to its weakest level against the US dollar since 1986. What happened? Since March 2022, the US Federal Reserve has been on a tightening mode. The result is that most major currencies have depreciated against the US dollar. A basket of the US major trade partners' currencies has depreciated by 6% against the US dollar. Of note here however is the significant depreciation of the Japanese yen which has weakened by more than 20%. This surpasses the declines observed in other Asian currencies where fundamentals appear to be even weaker than Japan. Just this week, the Japanese Yen fell to its weakest level against the US dollar since 1986. We delve into the reasons behind the sharp drop in the Japanese yen. Source: Tradingview What is driving weakness in the Japanese Yen? #1 - Interest rate differentials First, is the interest rate differentials, or carry to use the technical term. Notably, it is the 10-year US Treasury (UST)- Japan Government Bond (JGB)...