Japan's currency is weakening fast, which is bad news for anyone holding yen and a warning sign for its economy.

• The pandemic flooded the world with money, broke supply chains, and pushed up energy prices, spreading inflation everywhere.
• Japan finally hit 2% inflation in 2022, its first real inflation in decades.
• The US raised interest rates to 5% to fight inflation, but Japan kept its rates at zero and hoped inflation would fade on its own.
• With the US paying 5% on cash and Japan paying nothing, money keeps flowing out of yen and into dollars.
• No one wants to hold yen, so its value is falling.

Outlook: Unless Japan raises rates, the yen looks set to keep sliding as money chases higher returns elsewhere.