Ex-BOJ official raises concerns as yen depreciates against the dollar.
By Omkar Godbole Jul 9, 2026, 6:42 a.m. 2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on Bank of Japan. (Credit: By Wiiii-Wikimedia Commons/Modified by CoinDesk)SummaryShow- An ex-official of the Bank of Japan cautions that the central bank might quickly increase its benchmark interest rate this year, potentially surpassing 2%, due to the ongoing depreciation of the yen.
- Accelerated tightening by the BOJ could support the yen, which may adversely affect risk assets.
- Bitcoin and the yen have shown a significant positive correlation recently.
According to a warning from former Bank of Japan official Tsutomu Watanabe, who is now an economics professor at the University of Tokyo, the BOJ could soon raise its benchmark interest rate significantly this year, potentially exceeding 2%. This comes as the yen continues to weaken.
Currently, the benchmark interest rate stands at 1%, following recent increases, while the yield on 10-year government bonds is around 2.8%, the highest in over thirty years, as per data from TradingView.
Despite recent interest rate hikes and rising Japanese government bond yields, the yen has continued to decline. Since early 2021, it has depreciated by 60% to 162.36 per U.S. dollar and has fallen by 3% this year alone.
Should the BOJ proceed with rapid interest rate hikes, it might stabilize or even appreciate the yen. This raises questions about the possible impact on bitcoin BTC$62,818.81.
Market analysts have speculated that a sustained increase in the yen's value could lead to a reversal of bullish positions in government bonds, technology stocks, and cryptocurrencies, which have been supported by years of low-cost borrowing in yen. If this occurs, risk assets, including cryptocurrencies, could decline.
However, recent data indicates a strong positive correlation between the yen and BTC, both of which have been declining against the dollar in tandem.
Additionally, rapid interest rate increases could further strain Japan's already delicate fiscal situation, a concern highlighted by several economists.
The overall scenario remains complicated.
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