Where will the Japanese Yen go in 2025-2026? Watch the exchange rate analysis and Yen trend forecast.

Why the Yen Exchange Rate Trend Matters

The Japanese Yen is not just one of the five most traded currencies in the global forex market. It also serves as a reflection of Japan’s economic prospects, which ranks 4th in the world with a GDP expected to reach $4.19 trillion in 2025.

Additionally, the Yen acts as a (Safe Haven Asset) that investors flock to during global market turmoil, such as wars or financial crises. This makes monitoring the Yen’s trend essential for those investing in the global markets.

Five Key Drivers of Yen Exchange Rate Changes

1. Monetary policy from the Bank of Japan

The Bank of Japan employs unconventional tools like the (YCC) (Yield Curve Control) to purchase long-term government bonds and suppress yields. This approach supports liquidity flow into the financial system, but a side effect is a weaker Yen.

2. Monetary policies of other central banks

When the US Federal Reserve raises interest rates, the dollar appreciates. Conversely, this causes the Yen to weaken. The interest rate differentials between countries are thus a key driver of exchange rates.

3. Economic growth (measured by GDP)

Countries with expanding GDP tend to have stronger currencies due to higher demand for their currency. Conversely, countries with sluggish economies often see their currencies weaken.

4. Balance of payments

When a country experiences more capital inflows than outflows (current account surplus), the demand for its currency strengthens, leading to currency appreciation. The opposite scenario results in currency depreciation.

5. Global risk environment

When global financial markets are volatile, the Yen, as a safe-haven asset, often attracts increased capital inflows.

The Yen in 2025: Between Recovery and Uncertainty

This year, the JPY/THB exchange rate trades at 0.2176 Baht per Yen, slightly above the previous support level of 0.2150. It has recovered from a decline of over 30% since early 2021.

Throughout 2024 and into early 2025, as global inflation stabilizes, major central banks like the US Federal Reserve and the European Central Bank begin easing policies. Japan remains cautious.

Japan’s inflation rate still hovers between 2.5% and 3.5%, above the central bank’s 2% target. Therefore, despite some easing signals, such as reducing bond purchases from 9 trillion Yen to 7.5 trillion Yen in Q2, it is not enough to significantly strengthen the Yen.

Meanwhile, the Thai Baht remains stable, supported by a recovery in tourism, strong regional trade, and attractive real interest rates that draw foreign capital. All these factors keep the Yen under short-term pressure.

Forecast for late 2025: If the Bank of Japan continues to exit YCC with clear signals and inflation does not fall rapidly, the Yen may recover to around 0.2250 - 0.2300. However, if policy adjustments slow down, the Yen could test new historic lows.

Yen Exchange Rate Outlook 2026: Looking Ahead

Long-term charts show that JPY/THB has been in a downtrend since 2012, with highs and lows gradually decreasing after dropping below 0.2400 in 2023. The recent upward candle in 2025 suggests a potential reversal at 0.2150.

Possible scenario: If this support remains firm and macroeconomic factors support, the Yen could gradually rise to 0.2300-0.2400 in 2026. However, if the current levels cannot be maintained, the Yen might test below 0.2100, especially if Japan continues easing policies while Thailand benefits from regional growth and capital inflows.

What to Watch in 2026

Global interest rate and inflation differentials

Global inflation is expected to normalize, with the US and EU possibly adopting neutral policies. Japan may gradually tighten or even normalize its policies. This differential could support Yen appreciation. However, if the Bank of Japan remains cautious due to persistent high inflation, the Yen may continue to weaken.

Japan’s monetary policy shifts

The Bank of Japan has signaled intentions to exit aggressive easing. Concrete steps like ending negative interest rates or adjusting YCC could significantly support the Yen. Timing and pace are crucial; slow moves might limit Yen recovery, especially compared to regional currencies like the Thai Baht.

Capital flows and global situation

Major Japanese investors might repatriate funds in 2026 amid turmoil in emerging markets and global elections. Increased repatriation often supports the Yen. Additionally, regional geopolitical tensions in Asia could boost demand for Yen as a regional safe asset, impacting pairs like JPY/THB.

Technical Analysis Overview

Hourly JPY/THB charts show mostly bearish signals. Out of 13 technical indicators, 7 suggest “sell,” only 1 indicates “buy,” and 5 are neutral.

Trend indicators are evenly split with 6 “buy” and 6 “sell” signals, indicating no clear direction.

Despite downward pressure, excessive sell signals and long-term support levels below could trigger a reversal if market sentiment shifts.

Summary and Yen Outlook

The Yen trend is a crucial indicator that investors should not overlook, as it is linked to many other assets such as the US dollar, bond yields, and Japanese stocks.

2025 could be a pivotal year for Japan’s monetary policy, influencing the Yen’s movement at its core. It’s a critical period for traders and investors seeking to understand the foreign exchange market.