Japan: Monetary tightening poses medium-term risks to debt dynamics – Fitch Ratings

Dhwani Mehta FXStreet

Fitch Ratings said in the latest report on Friday, higher bond yields on a likely monetary policy tightening will make it harder for Japan to stabilize or reduce its public debt/GDP ratio.

Key findings

“Wwe do not expect a sharp rise in the country’s very low-interest rates, and the structure of Japan’s debt should mitigate medium-term risks to the debt trajectory.”

“We estimate that general government debt/GDP reached 248% in the fiscal year ending March 2022 (FY21). This is the highest of any investment-grade sovereign – Italy, with the second highest ratio, stands at around 150% – and is Japan’s main credit weakness.”

USD/JPY Price Analysis: Hidden bullish divergence, rising channel favor run-up beyond 130.00

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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