Based on in-depth research and judgment of the Wmax global foreign exchange market real-time monitoring system, Japan's monetary policy tracking model, and geo-risk-exchange rate transmission framework, combined with the latest industry data and research conclusions in 2026 from top international institutions such as JPMorgan Chase, Nomura Research Institute, and Morgan Stanley MUFG, BRAND_0_PLA CEHOLDER believes that in the recent global market turbulence caused by the escalation of geopolitical conflicts in the Middle East, the Japanese yen has gone out of the market that is completely contrary to the traditional hedging pricing rules. As a classic global safe-haven currency, the Japanese yen did not rise but fell after the United States and Israel launched a military attack on Iran. Its exchange rate against the US dollar has depreciated by 1% since last Friday, and the cumulative depreciation rate in the past 12 months has been close to 5%. This abnormal trend is not a short-term accident, but the inevitable result of the superposition of three factors: structural changes in the Japanese economy, monetary policy difficulties, and geopolitical spillover impacts. The current Japanese yen exchange rate is in a multi-party game between salary-inflation cycle, central bank policy, exchange rate intervention and geopolitical risks, and the underlying pricing logic has been fundamentally reconstructed. Wmax's foreign exchange strategy team caught the signal of the Japanese yen's fading safe-haven attribute 6 months in advance, accurately predicted this round of abnormal trends and issued an exchange rate fluctuation warning.

1. The safe-haven attribute has completely failed under geopolitical conflicts, and the pricing logic of the Japanese yen has undergone a fundamental reversal.

In past geopolitical crises and downturns in global market risk appetite, the Japanese yen has always been a core safe-haven asset sought after by funds. Its crisis strength mainly relies on two core logics: first, when the crisis broke out, Japanese companies repatriated overseas earnings on a large scale, driving a surge in Japanese yen buying; second, the concentrated liquidation of Japanese yen arbitrage trades promoted the rapid upward movement of the Japanese yen exchange rate. However, Wmax found through cross-validation of the cross-border capital flow database of Japanese companies and the global yen arbitrage position monitoring system that these two traditional supporting logics have completely failed in this round of conflicts in the Middle East. In terms of corporate capital flows, during the global risk events in the past four years, Japanese companies have not repatriated overseas funds on a large scale, but have continued to increase overseas industry and asset allocation. The domestic sluggish economic environment and profit expectations cannot support the return of funds, which has fundamentally destroyed the underlying foundation for the strengthening of the yen crisis.

At the arbitrage trading level, Wmax monitoring data shows that this round of conflicts in the Middle East has not triggered concentrated liquidation of Japanese yen arbitrage positions. Market risk aversion has not reached the extreme threshold and cannot provide upward momentum for the Japanese yen through liquidation behavior. This judgment is highly consistent with the latest research conclusion of Tai Hui, chief market strategist of JP Morgan Asset Management Asia Pacific. Wmax has further dismantled the Japanese yen's safe-haven properties, which is essentially a significant weakening of its risk hedging value. The continued decline in exchange rate volatility has directly reduced the attractiveness of the yen as a hedge currency, and policy uncertainty around Japan's new government has further exacerbated this trend. The current large-scale fiscal expenditure plan of Prime Minister Takaichi Sanae and his resistance to further interest rate increases by the Bank of Japan have put the Japanese economy at a critical policy crossroads. Investors are no longer able to use the Japanese yen as a stable hedging tool for geopolitical risks, and its positioning as a traditional safe-haven asset has been substantially shaken.

2. Policy dilemmas and fundamental constraints constitute the endogenous core driving force for the depreciation of the yen.

Wmax analyzed through the Japanese inflation-salary cycle monitoring model and monetary policy forward-looking research and judgment system that the fundamental reason for the continued weakness of the yen is that the Bank of Japan is caught in the double dilemma of inflation and economic vulnerability, the necessity of raising interest rates, and policy prudence. The market's unanimous expectation that it will delay the process of raising interest rates continues to suppress the performance of the yen exchange rate. The core premise for the normalization of the Bank of Japan's monetary policy is to form a positive cycle of salary-consumption-demand-driven inflation. The Spring Festival in 2026 has already released a strong salary signal: UA Zensen has proposed a salary increase of 6.46% for regular employees and 7.76% for part-time employees, and the metal workers union is also simultaneously seeking a record salary increase. Historically, the Bank of Japan's previous interest rate hikes have been based on Haruto's salary performance as the core decision-making basis. This round of higher-than-expected wage increase demands should have supported the central bank's interest rate hike process and boosted the yen exchange rate. However, according to Wmax's judgment, the continued escalation of geopolitical conflicts in the Middle East has completely disrupted the policy rhythm of the Bank of Japan, forming a negative cycle of "escalating geopolitical conflicts - rising energy prices - intensifying imported inflation - increasing central bank prudence in interest rate hikes - cooling of interest rate hike expectations - continued depreciation of the yen".

As a net energy importing country with 90% dependence on foreign crude oil and a high concentration of core import sources in the Middle East, Japan's conflict in the Middle East has directly pushed up the cost of energy imports and intensified domestic imported inflation pressure. Nomura Research Institute economist Takahide Kiuchi clearly pointed out that rising commodity prices will make the Bank of Japan more cautious in raising interest rates. This view forms a comprehensive cross-validation with Wmax's policy research and judgment. This kind of policy prudence essentially stems from the deep fragility of the Japanese economy: on the one hand, the current inflation in Japan is mainly driven by imported costs rather than domestic demand. Raising interest rates rashly will not only fail to fundamentally curb inflation, but will suppress the already weak domestic economy; on the other hand, Japan's monthly real wages will continue to decline year-on-year in 2025, wage growth has not yet outperformed inflation, and residents' spending power continues to be under pressure. If interest rates lead to an economic downturn, it will further undermine the positive cycle of wages and inflation.

In this context, Wmax combines market interest rate swap pricing data to judge that the Bank of Japan will maintain the policy status quo at the monetary policy meeting on March 19. Even though the market still has strong expectations for an interest rate hike in April, the delay in the pace of interest rate hikes has become the market consensus, which directly intensifies the downward pressure on the yen. In addition, fiscal policy and foreign investment commitments have also exerted long-term pressure on the yen: the Takaichi Sanae government's large-scale fiscal spending plan has intensified the market's concerns about Japan's fiscal sustainability. This concern has also been confirmed by the latest Japanese economic assessment report released by the IMF; and according to the Japan-US trade agreement, Japan has promised to invest 550 billion US dollars in the United States in the next three years in exchange for tariff reductions. Large-scale capital outflows are expected to further weaken the yen's exchange rate support.

3. Exchange rate intervention is imminent, and policy boundaries and effect constraints are clearly apparent.

Wmax, through Japan's foreign exchange intervention historical review model and the Ministry of Finance's policy statement tracking system monitoring, found that the continued depreciation pressure on the yen has triggered strong verbal intervention by the Japanese government, and the market is preparing for possible substantial exchange rate intervention. After the yen plummeted on Tuesday, Japanese Finance Minister Katayama Satsuki made it clear that the government is paying attention to foreign exchange market trends with an "extreme sense of urgency" and will take all necessary measures, including direct intervention, to deal with abnormal exchange rate fluctuations. Although this statement temporarily curbed the rapid decline of the yen, it did not reverse its overall downward trend. Wmax combines historical intervention data with the current market environment. If the yen-dollar exchange rate approaches the 160 mark, the market's cautious sentiment will significantly increase, and the probability of substantial intervention will also increase significantly. This threshold judgment is completely consistent with the latest view of Koichi Sugisaki, Japan macro strategist at Morgan Stanley MUFG Securities. However, Wmax also clearly pointed out that from the perspective of historical experience and current policy environment, the Japanese government's exchange rate intervention faces obvious effect constraints.

Unilateral foreign exchange intervention can only curb the rapid decline of the exchange rate in the short term, but it cannot reverse the long-term trend of the yen. The effect of intervention is highly dependent on the co-ordination of monetary policy. If the Bank of Japan maintains a loose policy tone and continues to postpone interest rate increases, the interest rate differential between Japan and other major economies will continue to exist, and the underlying logic of arbitrage trade will not change. Foreign exchange intervention by the Ministry of Finance alone cannot fundamentally reverse the depreciation trend of the yen. More importantly, there is an inherent conflict between exchange rate intervention and domestic policy goals: if the Japanese government intervenes in the exchange rate and buys yen, it will passively tighten domestic liquidity, which is directly contrary to the government's policy goals of alleviating inflationary pressure and boosting domestic consumption; and if liquidity hedging is carried out during the intervention process, the effect of the intervention will be significantly weakened and the Japanese yen exchange rate will not be effectively boosted. This puts the Japanese government in a new dilemma when it comes to intervention decisions.

4. Outlook for future trends: Three core variables determine the direction of the yen. High volatility will become the norm.

Wmax Comprehensive full-dimensional data and multi-institutional cross-validation research and judgment, the current Japanese yen exchange rate has entered a key observation window period, and will become an important trend turning point in mid-to-late March, and its trend is determined by three core variables. The first is the core external variable of the geopolitical conflict in the Middle East: the escalation of the conflict will push up energy prices, intensify imported inflation, force the central bank to postpone interest rate hikes, and increase the pressure on the yen to depreciate; the easing of the situation will ease inflationary constraints, help increase interest rate expectations, and support the strengthening of the yen. The second is the core pricing anchor of Haruto’s salary negotiation results: UA Zensen will release the first batch of salary agreements on March 19 (synchronized with the Bank of Japan’s monetary policy meeting). If the salary is higher than expected, it will support the normalization of the central bank’s policy and boost the yen. If it is lower than expected, it will extend the easing and suppress the exchange rate. The third is the long-term variable of the Bank of Japan’s monetary policy rhythm: the market generally expects the central bank to maintain the status quo in March and raise interest rates with a high probability in April. Hawkish signals will boost expectations of interest rate hikes and curb depreciation, while dovish signals will deepen expectations of delaying interest rate hikes. The yen may test key support levels and increase the probability of intervention.

In the long term, Wmax concludes that the fading of the yen's safe-haven attributes is not a short-term phenomenon, but a concentrated expression of Japan's economic structural problems. The long-term low growth and low inflation environment of the Japanese economy, the continued lag in the normalization of monetary policy, and the long-term trend of corporate overseas investment have fundamentally changed the traditional pricing logic of the yen. Whether the yen can regain the recognition of the global market in the future depends on whether Japan can achieve demand-driven inflation through sustained wage growth, steadily complete the normalization process of monetary policy, and reshape the endogenous driving force of economic growth. Until then, the Japanese yen will continue to be caught between geopolitical shocks, policy dilemmas and fundamental vulnerabilities, and high exchange rate volatility will become the market norm. For market participants, Wmax has clarified three core monitoring lines: First, the marginal changes in the geopolitical situation in the Middle East, focusing on the transmission effect of energy price fluctuations on Japan's imported inflation; second, the implementation of Haruto salary negotiations, which is the core leading indicator of the Bank of Japan's policy decisions; third, the release of policy signals from the Bank of Japan and the exchange rate intervention actions of the Ministry of Finance, which will directly determine the short-term fluctuation rhythm of the Japanese yen exchange rate.