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Trader: How Yellen scuttled Abenomics stimulus

The Federal Reserve's dovishness on interest rates is taking its toll on Japan's efforts to stimulate its economy, strategist Boris Schlossberg said Monday.

The dollar has fallen against the Japanese yen as the Fed has lowered investors' expectations for the pace of interest rate hikes this year. That has spoiled Japan's efforts to spur economic growth and increase exports by keeping the yen weak, according to Schlossberg, managing director of FX Strategy at BK Asset Management.

"Janet Yellen basically completely scuttled their chances of any kind of stimulus at this point, and they're in a very, very difficult situation because they have no growth and their currency continues to appreciate," he told CNBC's "Squawk Box."

The Fed's hesitance to raise interest rates is meant to address problems in China's economy, Schlossberg said. Fears about China's slowdown have roiled global markets in the past year.

The Fed is essentially trying to run Chinese monetary policy and prevent the yuan from depreciating very quickly, Schlossberg said. To stabilize the yuan, the Fed has sought to depreciate the dollar, he said.

"That's been the net positive on the global economy. Whether or not at this point the Chinese economy is strong enough for the Fed to begin the retightening cycle really remains to be seen," he said.

The Fed will likely stay on the sidelines through its June policy meeting, Schlossberg said. For that reason, the dollar will not strengthen and the yen will continue to be strong as traders unwind the once popular yen carry trade.

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