Walter Kurtz writes:  At the end of last October the Bank of Japan annnounced a large stimulus increase which was followed by a sharp decline in the yen. In 2015, however, even though the extraordinary monthly securities purchases are continuing, the declines have stopped as USD/JPY remains range-bound.

In the long run however, further yen weakness seems inevitable. The reason has to do with the sheer relative size of Japan’s quantitative easing. Based on the latest projections, the BoJ’s balance sheet will be above 90% of Japan’s GDP within a year or so. This dwarfs other major central banks’ monetary expansion efforts, including that of the ECB. Furthermore, given the scope and size of this program, it is unclear if the Bank of Japan can ever effectively exit it without a massive disruption to the nation’s economy. While we could see the yen strengthen briefly in the near-term, the currency will remain under pressure for some time to come.