Japanese Yen is weak
On December 26, the Japanese Yen (JPY) is fluctuating around its lowest level in many months against the US Dollar (USD) and has not shown any signs of recovery. Investors are skeptical about whether the Bank of Japan (BoJ) will actually continue to raise interest rates as expected. Meanwhile, the US Federal Reserve (Fed) still maintains its stance of tightening monetary policy, causing the interest rate gap between the US and Japan to widen. This makes the Yen, with its low yield, less attractive.
In addition, the optimistic sentiment in the market, as investors turn to risky assets, also reduces demand for the Yen, which is considered a safe haven. However, recent high inflation data from Japan still leaves open the possibility that the BoJ may raise interest rates in January or March. At the same time, risks such as geopolitical conflicts, trade wars, or the possibility of the Japanese government intervening in the market to support the Yen are making investors less likely to sell this domestic currency.
Concerns about intervention from the Japanese government
According to the minutes of the BoJ's October meeting released, the central bank may gradually raise interest rates, depending on inflationary developments. The target may be to reach an interest rate of 1% by the end of fiscal 2025.
However, the BoJ remains very cautious about monetary policy, emphasizing the need to focus on economic growth based on wages, while facing many domestic and international uncertainties. BoJ Governor Kazuo Ueda also said he will wait for more data to see if the current salary increase will be maintained next year before deciding on action.
Currently, the market believes that the BoJ will not raise interest rates at its January meeting but will wait until March. This continues to put pressure on the Yen.
Japan's Finance Minister Katsunobu Kato has warned of major fluctuations in the foreign exchange market and affirmed that the government will take action if necessary to prevent the Yen from depreciating too much.
Meanwhile, in the US, 10-year government bond yields have just reached their highest level since May, thanks to the Fed's stance on tightening policy for 2025. The US Dollar remains near a two-year peak despite the recently released consumer confidence data falling from 111.7 to 104.7.
Investors are waiting for the Richmond regional manufacturing index from the US to find more signals, but low trading volumes at Christmas will cause the market to fluctuate slightly.
According to Lao Dong, updated at 4:00 p.m. on December 26, the USD/JPY exchange rate is currently fluctuating around 157.321 USD/JPY, meaning 1 USD can be exchanged for about 157 JPY.
Update the latest Yen exchange rate HERE.
