Core Viewpoint - The Japanese yen has depreciated significantly against the US dollar, reaching a 10-month low, primarily due to the widening interest rate differential between the US and Japan, as well as Japan's economic policies [1][2]. Group 1: Currency Exchange Trends - As of November 20, the yen traded between 157.5 and 157.9 yen per dollar, a depreciation of approximately 10 yen since the self-defense party leadership election [1]. - The US dollar index has decreased by 8.22% this year, with the dollar depreciating against major currencies, but the yen's depreciation against the dollar has been relatively minor at 0.79% [1]. - Since the election of Prime Minister Fumio Kishida on October 21, the dollar has appreciated by 3.82% against the yen [1]. Group 2: Economic Policies and Stimulus Plans - Prime Minister Fumio Kishida announced a 21.3 trillion yen economic stimulus plan aimed at addressing inflation and boosting economic growth, which includes various subsidies and tax exemptions [3][4]. - The Japanese government plans to issue approximately 11.7 trillion yen (about 529.9 billion RMB) in new bonds to finance this stimulus plan, indicating a significant increase in government debt [3][4]. - The effectiveness of past stimulus measures has been questioned, as they have not met expectations and have contributed to rising government debt levels [4]. Group 3: Inflation and Monetary Policy - Japan has experienced persistent inflation, with the inflation rate reaching 2.4% in October 2024 and projected to rise to 4% in January 2025 [5]. - The Bank of Japan faces pressure to maintain a loose monetary policy to support government stimulus efforts, despite rising inflation that typically warrants interest rate hikes [5][6]. - The long-term reliance on quantitative easing has not yielded significant economic improvement, leading to concerns about the sustainability of such policies [5][6]. Group 4: Debt and Market Dynamics - The Japanese government's approach to financing its debt through bond issuance has distorted the bond market and led to capital outflows as investors seek higher returns abroad [6]. - The Bank of Japan holds over 40% of government bonds, raising concerns about its independence and the sustainability of its monetary policy [6]. - The upcoming monetary policy decision on December 19 will be crucial, as it will directly impact the yen's exchange rate and the broader economic outlook [6].