CAD / JPY - Canadian Dollar / Japanese Yen

CAD to JPY Exchange Rate History: Energy Strength vs. Deflationary Stability

The CAD to JPY exchange rate is a classic example of a currency pair influenced by contrasting macroeconomic dynamics. The Canadian dollar, closely tied to oil and commodities, often reflects global demand cycles, while the Japanese yen is traditionally seen as a safe-haven currency, strengthened by capital inflows during global uncertainty. The interplay between Canada’s resource-driven economy and Japan’s low-yield, export-oriented policy has created distinctive trends over the decades.

1990s: A Strong Yen Era

In the 1990s, the Japanese yen remained exceptionally strong, driven by:

• Japan’s massive trade surpluses.

• Global capital inflows into Japan amid its economic leadership.

CAD/JPY fell steadily:

• From around 95 in 1990 to as low as 65 by 1995.

• Japan’s persistent deflation and Canada’s fiscal austerity also contributed to CAD underperformance.

This decade marked the beginning of Japan’s “Lost Decade”, while Canada was still emerging from early ’90s recession.

2000–2008: Commodity Surge Lifts CAD

• The early 2000s saw a reversal, with CAD gaining strength as oil and metals surged globally.

• Japan, meanwhile, continued its ultra-loose monetary policy, keeping the yen weak in real terms.

CAD/JPY climbed:

• From 76 in 2002 to nearly 125 by 2007, the highest level in two decades.

This rally was largely due to:

• Booming commodity exports from Canada.

• Massive carry trades, where investors borrowed yen at low rates to invest in higher-yield CAD assets.

2009–2012: Post-Lehman Yen Strength

Following the 2008 financial crisis, global investors sought safety, and the yen surged:

• CAD/JPY collapsed from 120+ to below 80 in 2009.

Despite Canada’s relatively strong recovery:

• The Bank of Japan (BoJ) interventions didn’t weaken the yen effectively.

• CAD/JPY remained suppressed in the 80–90 range for most of this period.

Japan’s deflation, global risk aversion, and QE policies distorted traditional currency behavior.

2013–2019: Abenomics and New Dynamics

The Abenomics era brought structural changes:

• Massive monetary easing by the BoJ weakened the yen considerably.

• CAD/JPY rose again, stabilizing in the 85–95 range.

Key events:

• Japan introduced negative interest rates in 2016.

• Canada began modest rate hikes in the late 2010s, favoring CAD carry trade appeal.

However, weak oil prices and moderate Canadian GDP growth capped CAD’s upside.

2020–2024: Volatility, Inflation, and Monetary Divergence

During COVID-19 and its aftermath:

• CAD saw sharp swings due to oil market shocks.

• Japan maintained its ultra-loose policy, keeping interest rates near zero, even as other central banks tightened.

CAD/JPY fluctuated:

• From 75 in 2020 to above 110 in 2022.

Highlights:

• In 2022–2023, the Bank of Canada aggressively raised rates to combat inflation.

• The yen weakened sharply due to BoJ’s refusal to hike rates—creating one of the widest interest rate differentials in G7 currencies.

As of April 2025, CAD/JPY trades around 111.25, close to post-pandemic highs.

✅ Key

🟢 = CAD appreciated vs JPY
❌ = CAD depreciated vs JPY
⚠️ = Mixed / Volatile

📊 CAD to JPY Exchange Rate by Decade

The CAD to JPY exchange rate offers insight into the tug-of-war between inflationary, commodity-driven Canada and deflation-prone Japan. As interest rate divergence continues in 2025, CAD/JPY remains sensitive to global bond yields, oil prices, and any signs of policy shifts from the historically dovish Bank of Japan.