The yen is quietly crashing as Japan’s debt crisis bleeds into currency markets, and efforts to halt the slide are ‘doomed to fail,’ economist says

Japan’s yen is resembling a slow-motion train wreck as it remains stuck near 40-year lows, and there could be even more downside ahead.

On Monday, the yen was down 0.58% at 162.30 per dollar. It’s fallen 3.6% so far in 2026 and nearly 11% from a year ago.

Some of the more recent triggers include fears that Japan is lagging on efforts to fight inflation after the oil shock from the Iran war. While the Bank of Japan has hiked rates, more aggressive tightening may be necessary.

At the same time, other central banks are poised to get tougher, such as the Federal Reserve, making Japan’s policy and currency weaker by comparison.

Prime Minister Sanae Takaichi’s plans for more deficit spending, which would stoke inflation further, are adding to downward pressure on the yen.

But Robin Brooks, senior fellow at the Brookings Institution and former chief economist at the Institute of International Finance, has been sounding the alarm on the yen for a while and points to Japan’s massive debt, which has ballooned to 240% of GDP.

In his view,........

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