What it is the longterm outlook for the Yen?

With the recent surprise decision of Bank of Japan to expand what was already an unprecedentedly large monetary-stimulus program have sent the yen tumbling. Governor Haruhiko Kuroda and his team voted to raise the BOJ’s annual target for enlarging the monetary base to 80 trillion yen ($724 billion), up from 60 ~ 70 trillion yen. With his words of “doing whatever it takes” to meet the inflation target of 2 percent , the outlook for yen remains in the downside.

 

Moreover, the prelim GDP figures release at the start of this week had failed the expectations of 0.5% and churned out -0.4%. Thus sending the 3rd largest economy into recession with two quarters of GDP decline.

 

With the current state of the economy  too weak to undergo another round of tax hike, Shinzo Abe – prime minister of Japan has decided to delay the sales tax hike which was scheduled on October 2015. Following news that the country had slipped into a recession. He said he wanted voters to approve his decision to postpone a scheduled increase in the national sales tax, which he said would have slowed the economy further. Upon the kicking in of the expanding monetary base, the expectation for the Yen to remain bearish is persist.