Part 6/9:
Japanese debt concerns have contributed to a weaker yen and a comparatively stronger US dollar—especially when accounting for inflation-adjusted interest rates. Japan’s interest rates, once near zero or negative, are now rising, but inflation erodes purchasing power. Meanwhile, US interest rates remain relatively attractive, encouraging capital flows into USD assets.
The US dollar index has experienced a decline over recent years, benefiting assets like gold, silver, Bitcoin, and stocks. Nonetheless, the USD has strengthened against the yen, illustrating how these macroeconomic shifts are affecting currency dynamics. This widening interest rate gap favors the dollar and complicates Japan’s efforts to manage its debt.