🌈 [1 Dollar = 163 Yen] 3 Reasons Why We've Become a Country That Can't Afford iPhones | Understand the 'Bone-Deep Shock' in 5 Minutes

"The new iPhone is too expensive to buy."
You are not the only one who feels that way.
1 dollar to 163 yen. This is the weakest level for the yen in 39 years and 7 months.

Vegetables at the supermarket, home appliances, and overseas travel are all expensive.
You get the feeling that "Japan has become poor," don't you?

However, not many people can explain the true nature of this.
In this article, I will break down what is happening in Japan right now in 5 minutes.

By the time you finish reading, news headlines will"become relevant to your own household finances."You should be able to see them that way.

Conclusion: A weak yen is not a "gain for Japan," but a "gain for someone else."

Let's start with the conclusion.

A weak yen is not a matter of whether Japan as a whole gains or loses.
It is a mechanism that clearly separates those who gain from those who lose.

You often see comments on social media saying, "A weak yen is a plus for the Japanese economy."
But you shouldn't stop at that one phrase.

What matters is "a plus for whom?"

■ People who are thriving due to the weak yen

• Large export-oriented companies that sell overseas and earn money (sales received in dollars increase just by converting them to yen)

• Investors who hold U.S. stocks or foreign currency-denominated assets (the yen-denominated valuation increases without doing anything)

• The government, which holds large amounts of foreign currency (unrealized gains in the Foreign Exchange Fund Special Account grow)

■ People who are being quietly eroded by the weak yen

• Us, who receive our salaries in yen and buy imported food and smartphones

Japan imports a lot of its food, energy, and semiconductor products.
If the value of the yen drops, you need more yen to buy the same things.

In other words,the true nature of "price hikes" is not the store being mean, but the devaluation of the currencyitself.

Former "Oriental Radio" member Atsuhiko Nakata describes this situation as follows.
For the vast majority of people who wear affordable clothes, drive domestic cars, work in Japan, and live in Japan, the current weak yen is by no means kind.

Why was it sold off to a 40-year low? | The reason is "two forces"

So, why has the yen been sold off to this extent?

When watching the news, it's easy to be told that there is only one cause.
But in reality, two forces overlapped at the same time.

1. External force: "Dollar buying in times of crisis" due to rising tensions in the Middle East

When the world becomes unstable, investors flee to the "dollar for now."
In July 2026, the conflict between the U.S. and Iran intensified, and crude oil prices also rose.

As a result, the dollar was bought, and the yen was relatively sold.
On the New York market on July 21, it briefly hit the 163 yen per dollar level. This is the highest level since December 1986.

2. Domestic force: Caution regarding the fiscal expansion policy

Around the same time, the Japanese government decided on the "Basic Policies for Economic and Fiscal Management and Reform" (Honebuto no Hoshin) at a cabinet meeting.
Looking at its contents, the market felt anxious about Japan's fiscal situation.

With these two factors resonating, the yen sank to levels not seen in 40 years.

This will be on the test.
The current yen depreciation is neither "just Japan's fault" nor "just the fault of overseas factors."

The true nature of the "Honebuto Shock" | 3 points that made the market pale

To begin with, what is the "Basic Policies for Economic and Fiscal Management and Reform"?

Formally, it is called "Basic Policies for Economic and Fiscal Management and Reform." It has been created every year since 2001 and is the
blueprint for the national budget.

What do we spend our tax money on, and how much?
It is an extremely important document that determines those major policies.

The 2026 version was decided at a cabinet meeting on July 21.
Its title says it all.

The first year of "responsible proactive fiscal policy."

Around the time this draft was released, long-term interest rates rose and the yen depreciated.
This is the phenomenon called the "Honebuto Shock."

We will look at the reasons why the market reacted, narrowing it down to three points.

1. The sign for "fiscal consolidation" that had lasted for 20 years was taken down

In previous Basic Policies, "achieving a primary balance surplus" was the most important goal.

Roughly speaking, it is the goal of "covering that year's expenditures with that year's tax revenue without relying on debt."
It was a concept that had been in the leading role for about 20 years.

However, in the 2026 version, this goal was removed from the core.
Instead, the goal placed in its stead was "stably reducing the debt-to-GDP ratio."

Furthermore, the term 'fiscal consolidation' itself has ceased to be used.

Mr. Nakata compares this shift to a household.
It is like a father burdened with debt declaring that he will stop saving and instead 'increase his earnings to pay it back'.

If income truly increases, it is a sound strategy.
But if it does not, only the debt remains.

This is precisely the point that made the market wary.

② A sentence interpreted as 'pressure' on the Bank of Japan

The government and the Bank of Japan are actually always playing tug-of-war.

The government wants to use money to improve the economy.
The Bank of Japan wants to protect the value of prices and the currency through interest rates.

The original draft contained a description requesting the Bank of Japan to work closely with the government.
The market interpreted this as, 'Doesn't the government want to prevent interest rate hikes?'

The currency of a country where interest rates do not rise will be sold off.
This accelerated the depreciation of the yen.

There is a fact often overlooked here.
In the final decided document, this expression wasrevised.

Article 3 of the Bank of Japan Act (respect for the autonomy of monetary policy) was cited in a footnote, and the main text was also changed to the moderate phrasing of 'appropriate monetary policy management that contributes to the realization of stable price increases'.

The government demonstrated a stance of 'we will not interfere with the Bank of Japan'.

Even so, the yen's depreciation did not stop.
The market remembers the initial true intentions more than the revised text, doesn't it?

③ The '370 trillion yen' that looks like lavish spending

In the Basic Policies 2026, the figure ofover 370 trillion yen in investmentin strategic fields is listed.

Looking only at this number, it feels like the country is spending money like water.
However, let's understand this accurately.

370 trillion yen is the projected amount of 'public-private combined' investment.
The government is not bearing the entire cost.

On the other hand, the consumption tax cut on food products, which was a focal point, was not written into the Basic Policies themselves.
The conclusion has been postponed, with the statement that 'a policy will be decided by early August'.

Tax cuts are dangled as a possibility. The funding source is unclear.
This state of limbo has amplified anxiety.

The textbook is in the UK | The story of the Prime Minister who lasted 45 days

What does 'lavish spending without funding' lead to?
There is already a grand example of this.

The UK in 2022, under the Truss administration.

Although they launched large-scale tax cuts, there was insufficient backing for the funding.
The market reacted immediately, and the pound and government bonds plummeted.

As a result, Prime Minister Trussresigned just 45 days after taking office.
This is the incident later called the 'Truss Shock'.

There is only one lesson to be learned from this.

The market is looking at the consistency of the numbers, not the words of politicians.

Even though they weren't elected, the market mercilessly says NO to policies.
That is why the market is often calledthe 'ultimate opposition party'.

Let's be calm here | 'Counterarguments' you should know before getting angry

After reading this far, you probably want to jump to the conclusion that the government is to blame.

However, people who write good articles and make good decisions always check the opposing view.
To be fair, I will list three counterarguments.

Counterargument 1: The direct trigger for the yen's depreciation was the situation in the Middle East
It is reported that the main cause of the yen hitting the 163 level on July 21 was dollar buying during a crisis. The 'Basic Policies' are not the only culprit.

Counterargument 2: Rising interest rates were also a global phenomenon
During the same period, long-term interest rates were rising overseas as well. It is premature to conclude that this is an abnormal situation unique to Japan.

Counterargument 3: The new target might not actually be loose
The 'debt-to-GDP ratio' actually becomes harder to achieve when interest rates rise. It cannot be said simply that discipline has been relaxed.

In addition, there are quite a few experts who support the idea of proactive fiscal policy, which involves investing in growth first to increase tax revenue.

In other words,what is happening now cannot be explained by 'simply looking for a villain'.

Re-conclusion: We are on the 'side that loses without knowing'

Let's return to the conclusion once more.

The depreciation of the yen separates those who gain from those who lose.
And the dividing line is neither talent nor luck.

The dividing line is 'whether you know or not'.

People who hold foreign currency assets saw their assets increase due to the weak yen.
People who only held yen deposits saw their purchasing power decrease without doing anything.

Even though we live in the same Japan and watched the same news.

At the end of his video, Mr. Nakata asks his viewers this question:
Shouldn't we be allowed to be a little more angry?

I understand that feeling very well.
However, anger alone does not move the exchange rate.

Turning anger into action is the complete package.

Summary | What we can do starting today

• The weak yen divides 'Japan's gains and losses' into 'individual gains and losses'Exporting companies and holders of foreign currency assets profit, while those living in yen bear the burden.

• The current weak yen is the result of'dollar buying due to Middle East tensions' and 'caution regarding fiscal expansion' overlapping. There is not just one cause.

• The Basic Policies for Economic and Fiscal Management 2026switched the fiscal target to the debt-to-GDP ratio, and the phrase 'fiscal consolidation' disappeared.

• The description regarding the Bank of Japan wasrevisedin the final version, but market caution was not eased.

• However,counterarguments also exist. It is important to have the habit of judging by the numbers in the content, not by news headlines.

Finally, here are just three concrete steps you can take starting today.

1. Check what 'currency' your assets are denominated in
If everything is in yen, you are 100% affected by the weak yen. First, understand your current situation.

2. Verify news numbers with primary sources
'370 trillion yen' means something completely different depending on whether it is the public-private total or government spending. Let's get into the habit of checking sources.

3. Remember this discussion when you vote
Fiscal and monetary policies are decided at the ballot box. We are the only ones who can turn anger into a vote.

※This article is for informational purposes only and does not recommend any specific investment actions. Please make decisions regarding financial products at your own risk.

Even economic topics that seem difficult can be understood if you break them down.
The first step to escaping the side that 'loses money while remaining ignorant' started right here today.

How did you feel about the current situation in Japan?
Please let me know in the comments if you'd like.

If you found this article 'easy to understand', I would be happy if you couldLikeandshare it on social media.
Having as many people as possible know about this is the most reliable countermeasure.

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