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Recently, the global financial market has staged a shocking drama, and the currency war has started again.
Naturally, the focus is on Japan, a once-economic giant that has now fallen to its lowest level since 1995 due to a sharp exchange rate and a drop in GDP.
Let the outside world sigh:
"Is the yen once again facing the fate of being 'harvested' by the dollar?"
From Tokyo to Osaka, from Hokkaido to Kyushu, the current state of the entire Japanese economy is of concern.
To understand the current situation of the yen, we must first review the key data of the Japanese economy over the past few months.
According to the latest statistics released by the Japanese government, Japan's gross domestic product (GDP) in the second quarter of this year really returned to the level of 1995, with an adjusted annual growth rate of only 0.3%.
At the same time, the yen's exchange rate against the dollar fell sharply to 150 yen per dollar in just a few months, a low not seen in the past 20 years.
The sharp depreciation of the yen is related to a number of factors, but the most immediate reason is that the US economy is recovering faster than expected, which has contributed to the overall strengthening of the dollar.
Problems in Japan, such as an aging population, a rigid labor market, and a lack of incentives for innovation, have exacerbated the economy's vulnerability.
In addition, the Bank of Japan's continued low interest rate policy has also weakened the yen's attractiveness to some extent.
From the stock market in Tokyo to the shopping streets of Osaka, from the farmland of Hokkaido to the factories of Kyushu, the effects of the depreciation of the yen are everywhere.
For export-oriented enterprises, although the decline in the exchange rate has improved the competitiveness of their products in the short term, it has also increased the cost of raw material imports and squeezed profit margins.
In addition, Japan, as a resource-poor country, has seen its import costs for commodities such as energy and food soar, further fueling inflationary pressures.
More critically, the continued depreciation of the yen is triggering an outflow of domestic capital.
Many Japanese investors and companies are beginning to seek to move funds to more stable or higher-return external markets, and this flow of funds has exacerbated the depreciation pressure on the yen.
At the same time, for the majority of residents, the depreciation of the yen means that their purchasing power is weakening in the international market, and the costs are rising, from travel expenses to overseas shopping.
Against the backdrop of the global economic environment, the future of the Japanese economy is full of uncertainties.
While both the government and the central bank are trying to take steps to stabilize the exchange rate and stimulate economic growth, the results of these efforts have yet to be felt.
Whether the Japanese economy can reverse the current decline remains to be further tested by the market.
At this moment, on the cusp of financial markets, Japan seems to be undergoing a deep reflection on the way forward.
Whatever the outcome, this will be a major test of Japan's economic system and national resilience.
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-ENDS-
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