Bessent Signals Japan’s Yen Strategy: The Final Chapter of Abenomics

Rising uncertainty inside the Bank of Japan (BOJ) finds a new direction in Bessent’s latest statements.

Yen Under Control: Strategic Moves

Bessent emphasized that moves below the ¥150 level are now under tight supervision and that the BOJ has begun capping its liquidity injections at 0.5%.

The End of Abenomics: Policy Shifts

The three pillars of Abenomics – monetary easing, fiscal stimulus, and structural reforms – are now deemed “completed.” In this context, the $10 billion bond‑buying program is slated for termination and the 2.5% inflation target is under review.

Market Reaction and Liquidity Flow

■A 3.2% yen depreciation has heightened short‑term volatility in spot markets.

■Japanese equities rose 1.8%, while foreign investors’ net long positions increased by $2 billion.

■Global FX markets face a 0.7% liquidity squeeze, reshaping risk appetite.

Outlook: Risks and Opportunities

■An anticipated 0.3% rate hike could align the BOJ with its inflation goal.

■Yen stability may grant Asian exporters a 1.5% competitive edge.

■External shocks, such as energy price spikes, could trigger a 0.9% yen depreciation.

Kerem Tufan – Director of Commercial Loans and Central Bank Policies: Bessent’s cues indicate the BOJ is moving from aggressive easing to a “balanced exit” strategy. This transition raises the risk of a tightening in SME credit, while commercial loan growth is likely to linger around 4.1%. Macro‑prudent measures will compel the banking sector to maintain liquidity buffers at roughly 12%, nudging up the cost of credit. Investors should consider hedging against short‑term yen swings to keep their portfolio’s macro risk profile in check.