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 showed last week that inflation in Japan continued to rise.
Japan's Jibun Bank manufacturing PMI reached 49.6 in December, improving from 49.0 in November. Although this is the highest level since September, it still reflects the sixth consecutive month of declining production activities.
The Nikkei 225 index fell to around 39,950, ending a two-day streak of gains, due to the impact of rising US bond yields and a decline in Wall Street over the weekend.
USD and falling bond yields
The US Dollar Index (DXY) is trading around 108.00 as the yield on the 2nd and 10th terms decreased 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 to 3.0% in December, up from 2.6% the previous month. The CPI excluding fresh food and energy rose to 2.4%, indicating that inflationary pressures remained strong.
BoJ's future strategy
BoJ Governor Kazuo Ueda predicts the Japanese economy will reach the 2% inflation target next year. However, he stressed that policy adjustments will be based on economic and financial developments.
Japanese Finance Minister Katsunobu Kato warned of strong foreign exchange fluctuations, and affirmed that the government will 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 smoothly.
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.
