Yen exchange rate today
According to Lao Dong, on June 3, the Japanese Yen (JPY) suddenly weakened from a weekly low against the USD, in the context of the greenback recovering. However, the JPY's decline is expected to not be too deep, due to expectations that the Bank of Japan (BoJ) will continue to pursue a monetary tightening policy.
Positive sentiment in global equities has weakened demand for safe-haven assets such as the JPY. Meanwhile, the USD recovered slightly from a multi-week low, pushing the USD/JPY pair to a day high, around 143.25.
Yen depreciates but may not last long
According to FXStreet, the market still proved cautious about policy signals from BoJ. Speaking to the National Assembly this morning, Governor Kazuo Ueda reaffirmed that BoJ would continue to raise interest rates if the economy and inflation happen as expected. This is a completely contrary to the expectation that the US Federal Reserve (Fed) will reduce interest rates in the coming months - the factor that can limit the upper momentum of USD and support JPY.
In addition, geopolitical risks and trade uncertainty remain, causing investors to tend to buy in the JPY as the currency depreciates a move that could curb the USD/JPYs increase.
Regarding monetary policy, former BoJ Council member Makoto Sakurai said the BoJ may stop cutting government bond purchases starting next fiscal year, fearing further cuts will increase yields sharply, making it difficult to operate the economy and hold public debt.
In a meeting with financial institutions in May, the BoJ also received many recommendations to maintain or mitigate the pace of bond purchase cuts after fiscal 2026. The BoJ is expected to review the plan at its monetary policy meeting on June 16 17.
In the US, data has just been released showing that the manufacturing sector continues to weaken. The ISM manufacturing PMI in May fell to 48.5 the third consecutive month below the 50 threshold, showing a narrowing in manufacturing activity and could put the USD under pressure in the short term.
Meanwhile, tensions between Russia and Ukraine escalated when Ukraine launched a surprise attack on the Russian air base, while Moscow responded by launching a record number of 472 drones for one-way strikes increasing global risks, which could affect the currency market in the coming days.
