According to Robin Brooks, former chief currency strategist at the Goldman Sachs Group, Japan’s massive government debt is likely to undermine any efforts to support the yen – at least for now.
That debt has grown to the equivalent of more than 250% of the country’s economy, more than any other economy, according to data from the International Monetary Fund. And, he says, that has given the Bank of Japan a strong incentive to keep interest rates low to keep government costs in check.
The result: Barring a change in policy, this will thwart any efforts to boost the value of the yen, which is being dragged down by Japan’s insistence on the kind of rock-bottom interest rates the US abandoned two years ago.
