## Weak Yen: The Story of Currency Trends in 2025-2026 That Investors Must Follow

Over the next two years, fluctuations in the yen will be a key variable that could significantly impact your investment portfolio, especially for those monitoring the JPY/THB exchange rate. Currently, the yen has depreciated to just 0.2176 THB per yen, reflecting profound changes in the global financial landscape.

### Understanding the Basics: Why Is the Yen Depreciating?

The yen is not just an ordinary currency; it is one of the five most traded currencies in the world. This important identity is linked to Japan’s economy, which is expected to rank 5th globally in 2025 with a GDP of approximately $4.19 trillion. This identity also makes the yen a safe-haven asset that investors turn to during financial system risks.

The yen has depreciated against the Thai baht by over 30% in the past decade, driven by multiple factors—from the Bank of Japan’s continued easing policies to the Federal Reserve and European Central Bank’s interest rate hikes. These policy differences have led investors to shift toward higher-yielding currencies.

### Components Driving the Changes

**Interest Rates and Monetary Policy Measures**

Japanese financial institutions employ a strategy called Yield Curve Control (YCC), which involves purchasing long-term government bonds to keep yields within a set range. This approach differs from direct interest rate adjustments by other institutions. The result is increased liquidity flowing into the system, often leading to currency depreciation.

**Interest Rate Parity Between Countries**

When the US relaxes its tightening policies while Japan remains cautious, this interest rate differential prompts investors to demand more dollars, strengthening the dollar and weakening the yen.

**Economic Growth Trends and Trade Balance**

Rising GDP generally supports currency appreciation due to increased demand for that currency. Conversely, Japan’s declining exports (trade deficit) reduces demand for the yen.

**Global Market Conditions and Risk Factors**

The yen plays a role as a global safe-haven asset. During financial market turmoil or crises, the yen often appreciates as investors flee to safer assets.

### Current Conditions in 2025

The JPY/THB exchange rate currently trades at 0.2176 THB per yen, slightly above the long-term support level of (0.2150) after sustained pressure since early 2021.

In early 2025, Japan’s inflation rate is around 2.5-3.5%, higher than the BOJ’s 2% target. However, Japanese financial institutions remain cautious, with policy rates still negative at -0.1%.

A significant adjustment occurs in Q2 2025 when the BOJ reduces its monthly bond purchases from 9 trillion yen to 7.5 trillion yen. This signals a potential yen recovery, with the exchange rate strengthening from 0.2130 to 0.2176.

The Thai baht remains stable, supported by inbound tourism, strong regional trade, and foreign capital inflows, which continue to cause the yen to weaken against the baht.

If Japanese policymakers implement decisive policy changes and inflation remains high, the yen could rebound to 0.2250-0.2300 by the end of 2025. Conversely, delays in policy adjustments could push the yen to test new lows.

### Looking Ahead to 2026

From the long-term chart, JPY/THB has been in a continuous downtrend since 2012. After falling below 0.2400 in 2023, the pair has attempted to recover, mostly trading between 0.2150-0.2250 during 2024-2025. Currently, 0.2150 is a critical support level.

If this support holds and global economic factors support a gradual recovery, the yen might rise to 0.2300-0.2400 in 2026. However, if support breaks, the yen could continue weakening below 0.2100, especially if Japan maintains its easing stance while Thailand benefits from regional growth.

**Key Factors to Watch in 2026:**

1. **Inflation and Interest Rate Differentials** - If the Fed continues to cut rates while Japan maintains or normalizes its policies, the yen could strengthen. If Japan delays tightening, the yen may remain weak.

2. **BOJ Policy Normalization** - Ending negative rates or adjusting YCC would be strong signals that could significantly boost the yen. Timing and speed of these moves are crucial.

3. **Capital Flows and Geopolitical Risks** - Japanese investors repatriating funds amid uncertainty could support the yen. Meanwhile, regional tensions in Asia might increase demand for the yen as a regional safe-haven asset.

### Current Technical Analysis

The hourly chart of JPY/THB shows moderate sell signals, with 7 out of 13 technical indicators indicating a sell. Only 1 indicator suggests a buy, and 5 are neutral. Moving averages are evenly distributed, with 6 buy signals and 6 sell signals.

However, traders should exercise caution, as excessive downward pressure and long-term support levels may signal potential reversals if market sentiment shifts.

### Summary

The weakening of the yen is not a short-term phenomenon but a result of structural changes in the global financial landscape. 2025 and 2026 could be pivotal years that define the future trajectory of the yen and its exchange with the Thai baht. Investors and traders seeking to understand currency market dynamics should closely monitor actions by the Bank of Japan and macroeconomic conditions, as these variables will underpin the next movements of the currency and your investment opportunities.