Japan confirms largest-ever stimulus package... "Limited effect on risk assets"

Japan's announcement of a 21.3 trillion yen stimulus package is expected to sustain the weak yen trend. However, unlike in the past, there are views that the yen's weakness may not translate into upward pressure on risk assets such as virtual assets (cryptocurrencies).

On the 21st (Korea time), according to CoinDesk, the Japanese government officially confirmed a comprehensive economic package worth 21.3 trillion yen. This stimulus is focused on easing household price burdens and fostering future growth industries.

CoinDesk forecasted that this stimulus could deepen the weak yen phenomenon. The outlet reported, "Recently, the Japanese yen has fallen to 157.20 yen per dollar, and this stimulus is expected to further intensify the yen's weakness."

In particular, CoinDesk analyzed that this worsening of the weak yen may not lead to strength in risk assets. The outlet said, "In the past, yen weakness was interpreted as a factor that could inject upward pressure into risk assets due to the expansion of yen carry trades that leveraged low interest rates," adding, "However, this stimulus could worsen Japan's fiscal deterioration, undermining the yen's role as a safe-haven asset."

It added, "As the appeal of yen carry trades decreases, Japan's weak yen phenomenon no longer affects investment demand for virtual assets such as Bitcoin (BTC)."