Yen exchange rate today
According to Lao Dong, on July 16, the Japanese Yen continued to depreciate against the US Dollar, pushing the USD/JPY exchange rate above the 149, the highest level since the beginning of April.
The main reason comes from investors' reduced expectations that the Bank of Japan (BoJ) will soon raise interest rates, due to concerns that the Japanese economy will be affected by the US plan to impose higher taxes from August.
Yen continues to depreciate before the Japanese election
According to FXStreet, ahead of the Japanese Senate election on July 20, domestic political instability is putting more pressure on the Yen. Recent surveys show that the ruling coalition of the Japanese Prime Minister may lose its majority, increasing fiscal and political risks, while the Japanese economy is facing slowing growth, falling real wages, and cooling inflation. This makes it more difficult for the BoJ to raise interest rates, contributing to the Yen's continued weakness.
Meanwhile, the USD remains strong as the US inflation data has just been released higher than expected. The US consumer price index (CPI) in June increased by 0.3% compared to the previous month, bringing inflation to 2.7% over the same period, while the core CPI increased by 2.9%, pushing US bond yields to the highest level in many weeks. This has led investors to reduce expectations of a Fed rate cut soon, at least until September.
US President Donald Trump has also just signaled that he will impose a 25% tax on all Japanese goods exported to the US from August 1, in the context of stagnant trade negotiations between the two countries, especially related to the issue of protecting the Japanese rice market. This further makes the market worried about the trade risks affecting the Japanese economy, causing the Yen to lose its attractiveness.
