Question

Question: Why would Abenomics lead to a weaker yen?

Short answer

Abenomics would lead to an increase in the money supply in Japan, which weakens the yen.

Step-by-step solution

Explanation

Abenomics would lead to an increase in the monetary base, i.e., the citizen of Japan will have more money in their hands. As the supply of money increases, the demand for goods and services will increase and the imports will also increase.

If Japan imports from the U.S. the demand for import increases. Consequently the demand for the U.S. dollar will also increase.Thus, the U.S. dollar will appreciate, and the yen will depreciate. Hence, with the increase in money supply, the yen becomes weaker, or with Abenomics, the yen becomes weaker.