Yen exchange rate today
According to Lao Dong, on June 16, the Japanese Yen (JPY) recovered somewhat from its previous decline, as the weak USD and increasing geopolitical factors forced investors to seek safe-haven assets. The USD/JPY pair fell to around 144, the lowest level of the day.
The main reason supporting the Yen comes from expectations that the Bank of Japan (BoJ) will continue to aim for the normalization of monetary policy.
Japanese Yen slightly increases thanks to its role as a safe-haven asset
According to FXStreet, in the context of inflation in Japan tending to spread and be stronger than previously forecast, the BoJ is likely to keep interest rates unchanged at 0.5% at the policy meeting taking place this Tuesday, but the possibility of future interest rate increases is not ruled out.
At the same time, the BoJ is also considering a plan to cut half of Japan's government bond purchases from April 2026 - a clear sign of a shift to tighter policy.
In addition to domestic factors, tensions in the Middle East continued to escalate when Israel attacked Iranian nuclear facilities last week. In response, Iran launched hundreds of drones over the weekend and threatened to retaliate further. This uncertainty has further caused investors to shift to safe-haven assets such as the Japanese Yen.
However, the Yen's recovery has also been limited by positive sentiment in global stock markets and expectations that the BoJ may not raise interest rates further this year. Meanwhile, the USD is still under pressure as investors believe that the US Federal Reserve (Fed) may start cutting interest rates from next September and continue in 2025. The USD is still hovering near a three-year low.
All of the market's attention is now on two important policy meetings this week: the BoJ on Tuesday and the Fed on Wednesday. The developments from these two central banks will play a key role in determining the next trend of the USD/JPY exchange rate. With a clear dividing in the policy of "The BoJ tends to tighten, while the Fed is leaning towards easing" experts say that the downward pressure on USD/JPY is still persistent.
