Japanese Prime Minister Shinzo Abe's, known as Abenomics, becomes less credible over time. Japan's recession made the Bank of Japan increase the volume of its stimulus program, thus boosting its balance sheet. It is still unclear how the government is going to offset budget holes caused by massive QE in light of the fact that the next tax increase had to be delayed.
Analysts at Moody 's Investors Service say this may have a negative impact on the Japanese ability to pay off the debt. The agency downgraded Japan's credit rating from A3 to A1. The outlook for the rating is "stable".
The USD/JPY pair did not react to the rating's fall and remained around 118.30.
