Further yen weakness, in an environment of slowing global growth, will put pressure on other central banks to ease policy.  Although attention is rightly focused on the ECB, Japan’s biggest trade partners, who derive significant parts of GDP from trade with Japan, are in Asia (top chart).  Such trade openness coupled with a strong appreciation of their currency (bottom chart) is going to drag heavily on growth prospects.  This is worth keeping an eye on as other Asian countries may soon start intervening more aggressively in managing their own exchange rates.

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Source: Variant Perception, Bloomberg and Macrobond