`A strong yen is in our national interest,` former Deputy Finance Minister Eisuke Sakakibara said at an event in late November.

Sakakibara was once known as `Mr. Yen` in the second half of the 1990s, when he led the country’s foreign exchange intervention operation.

According to Nikkei, currency is a mirror that reflects a country’s credit reputation.

The first problem is that Japan may lose its position as the world’s largest creditor, measured by net external assets – total foreign loans minus total foreign debt.

A corner of a local currency note taken against the background of the Japanese flag.

In 2022, Japan’s net foreign assets ranked first in the world with a record of 3,100 billion USD, followed by Germany (2,900 billion USD).

There are several reasons why Japan’s position is shaky.

The deficit will take place from the first quarter of 2022 and the total deficit from then to the second quarter of 2023 will be about 4,500 billion yen (30 billion USD).

The key factor is the widening trade deficit due to a decline in Japanese exports, especially semiconductor-related products.

Emin Yurumazu, an economist at Million Eyes in Tokyo, is not happy about having to forecast the yen.

Comparing yen to lira is Yurumazu’s satirical take on it.

During the period March 2020 to October 2023, the yen’s real exchange rate fell 29%, compared with a 21% decline in the lira.

Toru Sasaki, Chief Strategist of Fukuoka Financial Group, the correlation comparison `highlights the substantive weakness of the yen`.

According to statistics from the Bank of Japan, net capital flows abroad through securities investment trusts – the difference between the amount invested and the amount received – totaled 105,000 billion yen (more than 710 billion USD).

A new tax-free program for small investments, called NISA, will be launched in Japan early next year, to attract personal cash flow.

In the era of globalization, confidence in the yen, which is the foundation for attracting money to Japanese companies, should not be underestimated.

If their confidence wanes, they will certainly start looking at the profits and stock prices of Japanese companies on a USD basis.

If someone wants to assert that escaping a deflationary economy or maintaining a strong yen is in the national interest, it must be felt by the people as reality, otherwise it will be just wishful thinking.