Yen exchange rate today
According to Lao Dong, on May 16, the Yen appreciated, the USD/JPY exchange rate fluctuated around 145.00. This is the fourth day in a series of price increases for this currency.
The main reason comes from the expectation that the Bank of Japan (BoJ) will continue to raise interest rates in 2025, in contrast to the interest rate cut trend from the US Federal Reserve (Fed).
Although Japan has just announced that GDP in the first quarter of 2025 will decrease by 0.2% worse than the forecast of a decrease of 0.1% and in complete contrast to the increase of 0.6% in the previous quarter the Yen is still not affected much. On a year-on-year basis, GDP fell 0.7%, marking the first quarter of a year of decline. However, investors remain optimistic as the BoJ shows a tough stance on monetary policy.
Yen receives positive support factors
According to the recent Meeting of Boj Meeting, policy makers remain openly the possibility of further interest rates if the US tariff situation is stable. Deputy Governor of BoJ - Mr. Shinichi Uchida - also confirmed that the agency was still steadfast in the raising level to control inflation. A Reuters survey showed that most economists expect BoJ to keep the interest rate until September, but most of them still believe that at least one 25 basic increase will take place before the end of the year.
On the other hand, the USD is under pressure as many US economic data show slowing growth. Specifically, the producer price index (PPI) in April fell 0.5%, while retail sales increased slightly by 0.1% much lower than the previous months 1.7%. This has increased expectations that the Fed will continue to cut interest rates in the coming time, putting pressure on the USD and US bond yields.
In addition, the Yen is also supported by expectations that Japan and the US will soon reach a trade agreement. The Japanese trade representative may go to Washington next week for the third round of negotiations. Japan is preparing proposals to ease trade barriers from the US, including asking the US to reconsider taxes and support affected businesses.
However, market sentiment was somewhat reassured when the US and China agreed to temporarily suspend the tax for 90 days. US President Donald Trump also left open the possibility of direct negotiations with Chinese President Xi Jinping. This kept the USD/JPY exchange rate stable around 145, although the trend was slightly leaning towards the Yen.
