To Robin Brooks, the former chief currency strategist at Goldman Sachs Group, Japan’s massive government debt — for now at least — is likely to doom any efforts to prop up the yen.
That debt has grown to the equivalent of more than 250% of the nation’s economy, more than any of its peers, according to data from the International Monetary Fund. And, he says, that’s given the Bank of Japan a strong incentive to keep interest rates low to hold down the government’s costs.
The upshot: Barring a change in policy, that’s going to counteract any efforts to drive up the value of the yen, which is being dragged down by Japan’s adherence to the sort of rock-bottom interest rates that the U.S. abandoned two years ago.