Japan's economy, which has already been facing downward pressure amid the war in Ukraine and the yen's depreciation, may also be affected by China's radical "COVID zero" policy and the yuan's rising trend.

With energy and commodity prices increasing globally in the wake of Ukraine's invasion by Russia, a major oil and gas producer and exporter, resource-poor Japan might experience "bad inflation" — a combination of an economic downturn and higher costs.

The yen is certain to extend losses against other key counterparts including the U.S. dollar and the euro as the Bank of Japan has kept up its ultraloose monetary easing, likely driving up import prices and accelerating inflation at home.