I have recently wondered about the depreciation of the Japanese Yen against the USD (or any other major currency).
Currently, a thousand Yen is at around USD 7,75. This is about about a twenty-year low. And I am kind of confused why.
I am aware that the US FED has started to raise its interest rate (and the BoJ did not) and is expected to continue to do so. However, the Fed Funds rate right now stands at 1%, while US inflation is at around 8%. Japanese inflation on the other hand is way below 2%.
To me it seems like a bad idea to hold USD at the moment (inflation is much higher than the interest rate) and a somewhat less bad idea to hold Yen (inflation is only somewhat higher than the interest rate). But why is it that the Yen is depreciating so much?