An article in the Wall Street Journal in 2023 noted that “the yen may weaken more in coming months on expectations that the interest-rate gap between Japan and most other countries could widen further.”

a. What does it mean for the yen to “weaken”?

b. To cause the yen to weaken, would Japanese interest rates have to be falling relative to interest rates in other countries or rising relative to interest rates in other countries? Briefly explain.

c. Would a weaker yen be good news or bad news for Japanese firms that make substantial exports to other countries? Briefly explain.