## What Investors Need to Know About the Movement of the Japanese Yen in 2025-2026

The yen is a currency that investors worldwide must continuously monitor, as it is not just an ordinary currency but a key link in the global financial system. It ranks fifth in trading volume in the foreign exchange market and also serves as a safe-haven asset for investors during crises.

Japan, the world's fourth-largest economy, is expected to have a GDP of approximately $4.19 trillion in 2025. Therefore, understanding what drives changes in the yen is essential for market analysis.

### The Main Factors Affecting Yen Behavior

**Central Bank Policies:** The Bank of Japan's (Yield Curve Control) (YCC), which involves purchasing long-term bonds to suppress yields, puts downward pressure on the yen. Meanwhile, the Federal Reserve and the European Central Bank are raising interest rates and changing policies. The divergence in policy directions becomes a primary factor in determining exchange rate trajectories.

**Economic Growth:** When a country's GDP expands, demand for its currency increases, leading to currency appreciation. Conversely, a weak economy results in currency depreciation.

**Balance of Payments:** Surplus indicates strong demand for the currency, while a deficit suggests weak demand pressures.

**Global Risk Sentiment:** During times of global financial uncertainty, the yen often receives buying support due to its status as an accepted safe-haven asset.

### The Movement in 2025 and Its Significance

The current JPY/THB exchange rate is approximately 0.2176 baht per yen, a slight recovery from the low of 0.2130 in Q2 after decades of yen depreciation of over 30% against the baht.

In early 2025, Japan's inflation rate remains between 2.5-3.5%, higher than the central bank's 2% target. However, the Bank of Japan continues to proceed cautiously, with policy interest rates still at -0.1%. Meanwhile, the Federal Reserve and the European Central Bank are easing monetary tightening, which supports the yen through lower interest rate differentials.

A key signal is the reduction of the Bank of Japan's monthly bond purchases from 9 trillion yen to 7.5 trillion yen, indicating a move away from easing policies. This change suggests that 2025 could be a turning point for the yen.

The Thai baht continues to be supported by a recovery in tourism, regional trade stability, and inflows of foreign capital, keeping the JPY/THB under pressure.

If the Bank of Japan moves away from YCC and inflation remains high, the yen may rebound toward 0.2250-0.2300 before the end of 2025. If not, the yen might test new lows below 0.2100.

### Long-Term Outlook for 2026

Based on long-term chart analysis, the JPY/THB has been in a downtrend since 2012, with both highs and lows trending lower. The support level at 0.2150 is seen as a significant inflection point.

If this level can be maintained and macroeconomic factors are favorable, the yen could gradually recover to 0.2300-0.2400 in 2026. However, failure to hold this level might lead to further testing below 0.2100, especially if Japan continues easing while Thailand benefits from regional growth.

### Key Factors to Watch in 2026

**Inflation and Interest Rate Differentials:** If the Fed continues to lower rates while Japan gradually tightens or normalizes its policy, this differential will support the yen. If the Bank of Japan slows its tightening, the yen may remain under pressure.

**Japan's Policy Path:** Ending negative interest rates or adjusting YCC could significantly strengthen the yen. Timing is crucial—slow moves might limit the yen's recovery.

**Capital Flows and Geopolitical Risks:** Japanese investors may repatriate funds in 2026 amid uncertainties in emerging markets. Capital inflows often support the yen. Regional conflicts in Asia could also increase demand for the yen as a regional safe-haven asset.

### Current Technical Analysis

The hourly chart of JPY/THB shows sell signals from 7 out of 13 indicators. Only 1 indicator suggests buying, and 5 are neutral. Moving averages are balanced, with 6 indicators recommending buy and 6 recommending sell, indicating no clear short-term trend.

However, downward pressure from technical indicators is evident, as most signals point in the same direction, suggesting a slight bearish bias. Nonetheless, the long-term support level at 0.2150 could act as a turning point.

### Summary of Key Points

The trend of the yen is not only important for yen traders but also impacts the dollar, bond yields, and the Japanese stock market. 2025 and 2026 could be pivotal years as Japan's monetary policy enters a new phase. Investors tracking the yen in 2026 need to closely monitor macroeconomic factors and policy changes, as these will determine opportunities and risks during this period.