The spreading of COVID-19 has forced the yen to appreciate, as is normally the case for the currency in times of crisis. This entails further pressure on an already stressed central bank, as Kiran Sakaria from Handelsbanken notes.

Key quotes

“Inflation figures from Tokyo were weaker than anticipated, further underlining the problem. In addition, consumers’ willingness to buy remains subdued.” 

“The new coronavirus is threatening the summer Olympics in Tokyo. We see no relief on the horizon for Japan, and we expect the yen to remain strong for the near future.”

“In the slightly longer term, however, we believe more measures will be taken, which may result in a weaker currency.”