The yen’s depreciation, especially vis-à-vis the U.S. dollar and the euro, was promoted mainly by the growing yen carry trade (selling yen and buying foreign currencies) in the face of interest rate differentials and the risk-taking behavior of investors (Chart 5).
This view is consistent with the fact that both large and small and medium-sized firms in the manufacturing sector indicated more favorable sentiment over business conditions than their counterparts in the nonmanufacturing sector.