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On the chessboard of the global economy, the U.S. interest rate hike strategy has caused waves.
In this storm of international finance, Japan is particularly vulnerable.
The continued depreciation of the yen and the sharp fluctuations in Japanese government bonds show the marginalization of Japan in the global financial system.
Recently, the expectation of continued interest rate hikes in the United States and the accumulation of domestic economic pressure have forced it to adopt a more aggressive posture in external policy, intending to solve domestic worries through external pressure.
At this time, Japan, as a close ally of the United States, has obviously fallen victim to its economic security, and the yen may no longer be able to hold off this wave of fierce global capital.
The current predicament of the US economy is not confined to its domestic borders, and its use of international influence also shows a clear strategic adjustment.
Domestically, the path of interest rate hikes in the United States is seen as necessary to combat inflation, however, the international implications behind this are far-reaching.
Especially for an economy as highly dependent on exports and foreign capital as Japan, U.S. policy changes have a direct impact on its economic stability.
Japan's already fragile fiscal position is high, with a public debt of 1,450 trillion yen, a figure unprecedented in the world.
As the pace of interest rate hikes in the United States accelerated, global capital began to reassess risk and return, and a large amount of capital was withdrawn from Japan.
This led to a sharp drop in the yen exchange rate and unusual fluctuations in government bond yields.
This rapid outflow of capital has not only exacerbated fiscal pressures in Japan, but also further pushed up its borrowing costs, making the road to economic recovery more difficult.
In the process, the Bank of Japan's monetary policy is also facing serious challenges.
In order to prevent the economy from overheating, Japan has been pursuing a policy of low interest rates, which are almost one of the lowest in the world.
However, this policy is inadequate in the current international environment.
The tightening of global capital liquidity due to rising interest rates in the United States means that the Bank of Japan is unable to balance the market with traditional monetary policy tools.
As a result, under the dual pressure of external forces, Japan's ability to regulate and control the economy on its own has been seriously weakened.
In addition, Japan's role in international trade has been challenged by changes in U.S. policy.
As the world's third-largest economy, Japan's exports account for a significant proportion of its GDP.
The U.S. interest rate hike has directly affected the demand pattern of the global economy, which in turn has affected Japan's export business.
Especially in the technology and automotive sectors, many companies in Japan rely on stable demand from the global market, which is shrinking rapidly.
Economists warn if the United States continues to raise interest rates.
It could push up global borrowing costs even further, which is undoubtedly worse for Japan, which is already heavily indebted.
In response to this external pressure, the Japanese government may have to adopt more drastic fiscal austerity measures, which will further dampen domestic consumption and investment, adding to the downward pressure on the economy.
Japan's government bonds have always been one of the safe havens in global financial markets, but now, that status is being challenged.
As U.S. interest rate hikes deepen, other economies are likely to follow suit.
Global investors are starting to look for higher-yielding assets, which has led to a decrease in the attractiveness of Japanese government bonds and a decrease in market demand.
Such a shift would not only increase the Japanese government's financing costs, but could also lead to long-term instability in its bond market.
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