Three reasons why BOJ rate hikes will not save the yen

The article argues that even if the Bank of Japan raises rates, it may not be enough to meaningfully support the yen. It cites three main headwinds: Japan’s fragile fiscal position and very high debt-to-GDP ratio, still-negative real interest rates despite higher nominal rates, and the fact that markets already price in multiple BOJ hikes. The piece suggests the BOJ would need to surprise traders with a much more aggressive tightening path to change yen sentiment, but that would be constrained by debt-servicing risks. Overall, the yen remains under pressure because policy expectations are largely embedded and broader macro and geopolitical risks continue to weigh on the currency.