According to FXStreet, on December 30, the Japanese Yen (JPY) maintained its strength against the US Dollar (USD) after increasing in price.
This expectation comes after Tokyo Consumer Price Index (CPI) data last week showed inflation in Japan continued to rise.
The Jibun Bank Japan Manufacturing PMI came in at 49.6 in December, up from 49.0 in November. While that was the highest reading since September, it still reflected the sixth consecutive month of contraction in manufacturing activity.
The Nikkei 225 index fell to around 39,950, ending a two-day winning streak, weighed down by rising US bond yields and Wall Street's losses over the weekend.
USD and bond yields fall
The US Dollar Index (DXY) traded around 108.00 as 2- and 10-year yields eased slightly to 4.32% and 4.62%. However, the US dollar may receive support from expectations that the Fed will cut interest rates less in 2025.
The Tokyo CPI rose 3.0 percent in December, up from 2.6 percent in the previous month. The CPI excluding fresh food and energy rose 2.4 percent, indicating that inflationary pressures remain strong.
BoJ's Future Strategy
BoJ Governor Kazuo Ueda forecasts Japan's economy will reach its 2% inflation target next year. However, he stressed that policy adjustments will depend on economic and financial developments.
Japanese Finance Minister Katsunobu Kato warned of sharp foreign exchange fluctuations, saying the government would take action if necessary.
The BoJ also revealed the possibility of raising interest rates, expected to reach 1.0% by the end of fiscal 2025, if inflation and wage growth develop favorably.
According to Lao Dong, updated at 2:00 p.m. on December 30, the USD/JPY exchange rate is currently fluctuating around 157.826 USD/JPY, meaning 1 USD can be exchanged for about 158 JPY.
Update the latest Yen exchange rate HERE.
