Since the Sino Japanese crisis, safe haven capital has accelerated its flight, and the Japanese yen has passively depreciated from 153 to around 157 against the US dollar. At the same time, Besent has repeatedly hinted in public that Japan needs to raise interest rates, almost using rhetoric to "pressure" the Bank of Japan. During the election period, Takashi Hayao consistently portrayed himself as a loyal successor to "Abenomics," standing firmly on the side of extreme easing and advocating for continued economic support through low interest rates and loose fiscal policies. The market originally expected that once she took office, she would strongly suppress the central bank's interest rate hikes and continue the "delaying tactic" of the Kuroda Ueda era. Traditionally, 155 has been regarded as a psychological defense line for the Japanese Ministry of Finance to intervene in foreign exchange. But the exchange rate trend in this round of decline has a bit of a "out of control" flavor - when safe haven capital votes with their feet, the Bank of Japan has to choose between two paths: Either use foreign exchange reserves to directly smash the market and forcefully pull back the exchange rate; Either make up your mind to raise interest rates and use interest rate differentials to keep some capital in Japan and curb flight. The "liquidity vacuum period" around Thanksgiving actually gave Japan a relatively ideal operating window: intervening during the semi closed and light trading periods in the US and European markets makes it easier to pull the yen back from 157-158 to the 150-152 range, allowing the market to once again feel the presence of "someone behind". Structurally speaking, this round of yen depreciation is not just a simple exchange rate fluctuation, but a multiple impact on Japan's industry, geography, and security landscape: 1. Export competition to China The objective effect of the continuous depreciation of the Japanese yen from 110 to 150+is that the factory price of the same Japanese product priced in US dollars has been discounted by 30%. Japan already competes directly with China in many mid to high end manufacturing fields, and now coupled with such significant exchange rate discounts, Japanese goods are cheaper than Chinese goods in the international market, which is a real pressure on China's exports. No wonder some people interpret this round of yen depreciation as a competitive tool of "beggar thy neighbor" - in a global market with limited demand, whoever seizes orders through depreciation will squeeze out others' share. 2. Forcing the renminbi to passively follow and amplifying the pressure of capital outflows from China When the Japanese yen depreciates like this, if the Chinese yuan insists on being strong, it will suffer even more losses in export prices; But once the RMB also depreciates significantly, it will amplify the "cheap sale" effect of domestic assets, stimulate residents and enterprises to accelerate their outward allocation, and increase capital outflow pressure. So the depreciation of the Japanese yen is not only a competition on the trade level for China, but also a "squeeze test" on the capital account. 3. Japan's own 'resource curse': the side effects of devaluation The problem is that Japan is not a resource self-sufficient economy, but an island nation highly dependent on imports: Energy needs to be imported - oil, natural gas, and coal are mostly imported; Grain needs to be imported - the self-sufficiency rate is relatively low, and the dependence on external sources for key rations is not small; Security also needs to be imported - buying Tomahawk cruise missiles, F-35 fighter jets, and various defense systems from the United States all require settlement in US dollars. On the same day, the yen depreciated from 110 to 150 and then continued to decline, causing all things priced in US dollars to rise in price for Japan. On the books, the military budget appears to be increasing year by year, but after being converted into US dollars, the weapons and energy that can be purchased may become increasingly scarce - this is a typical case of "nominal growth, real shrinkage". So, the real contradiction in Japan now lies in this: If we continue to bear ultra-low interest rates and let the yen depreciate to 160 or even 170, it seems that our export competitiveness will be stronger, but Japan's import purchasing power will be severely eroded, and energy and military equipment will be stuck in the exchange rate—— The result is that although the military spending figures have increased, we cannot engage in a war of attrition. If we choose to raise interest rates to stabilize the exchange rate, it will put pressure on domestic debt, stock market, and real estate in the short term, and also damage the political legacy of "Abenomics". However, at least we can hold onto one basic principle: ensuring that Japan still has sufficient energy and weapon supplies in high-intensity confrontation scenarios. A country with a continuously out of control exchange rate and currency collapse cannot sustain long-term high-intensity confrontation. For Japan, in order to play the "geopolitical card", the first step is to stabilize the exchange rate.