The yen's value may slide further, testing the tolerance of price-sensitive consumers — and Japanese policymakers.
The biggest driver would be the divergence between the U.S. Federal Reserve, which has apparently entered a rate hike cycle, and a dovish Bank of Japan with continued commitment to keeping powerful monetary easing for an extended period.
Surging crude oil and commodity prices in the aftermath of Russia's invasion of Ukraine have pointed to the worsening of the current account balance of resource-poor Japan, supporting yen weakness.