Japanese Yen continues to dominate
In the trading session on February 20, the Japanese Yen (JPY) continued to increase strongly, pushing the USD/JPY pair to its lowest level since December 9, approaching the record level of 150.00 - the highest level in the past 5 months.
Investors are betting that the Bank of Japan (BoJ) will continue to raise interest rates to control inflation. This has seen Japan's JGB (JGB) government bond yield hit its highest level in more than a decade, narrowing the interest rate gap with other countries and further strengthening the yen.
Not only that, former US President Donald Trump's recent statements about the new tariffs have reduced the sentiment of investing in risky assets. Investors rushed to safe havens, including the Japanese Yen.
Meanwhile, although the US Federal Reserve (Fed) still maintains a tough stance on monetary policy, the USD cannot take advantage of this advantage.
This has seen USD/JPY continue to fall for the second consecutive session and mark the fifth decline in the last six sessions, confirming a break from the 151.00 support level and opening up the possibility of further weakness.
BoJ may raise interest rates
Yesterday, BoJ board member Hajime Takata said that real interest rates in Japan are still at a deep negative level and if the economy develops as expected, the BoJ will need to adjust monetary policy. This further reinforces expectations that Japan will soon raise interest rates further, especially after the fourth quarter GDP report showed strong economic growth in the country.
According to a Reuters survey, more than 65% of economists predict the BoJ could raise interest rates to 0.75% in the third quarter of this year. In addition, the salary increase in this year's labor negotiations is expected to reach 5.00%, higher than the 4.75% in the survey in January.
Meanwhile, former US President Donald Trump has made the market more worried when he announced that he will soon impose new tariffs on some products. This raises concerns about a new trade war, making investors more hesitant to invest in risky assets.
In the face of this development, Japan is not left still. According to Asahi, Japanese Commerce Minister Yoji Muto is planning to travel to the US in March to negotiate with the Trump administration, in order to request a tariff exemption for Japanese steel and automobiles.
According to Lao Dong at 12:00 on February 20, 2025, the Yen increased to 150.206 USD/JPY.
