Japanese Yen Nears Bottom Against USD
According to FXStreet, on December 13, the Japanese Yen (JPY) continued to depreciate against the US Dollar (USD) for 5 consecutive days and hit its lowest level in more than 2 weeks. The main reason is that the market believes that the Bank of Japan (BoJ) will not raise interest rates at its upcoming meeting. At the same time, expectations that the US Federal Reserve (Fed) will maintain a less easing policy also helped US bond yields increase, reducing the appeal of JPY - a low-yielding currency.
However, several factors such as risk aversion, geopolitical tensions, and US President-elect Donald Trump's tariff plans still supported the JPY as a safe-haven asset. Meanwhile, the USD held its weekly gains to a new monthly high but failed to push the USD/JPY pair above 153.00. Investors are cautious and awaiting major policy events from the Fed and the BoJ next week.
Concerns over BoJ rate hike plan keep investors on the sidelines
The Bank of Japan's Tankan survey showed business confidence among large Japanese companies hit its highest level since March 2022. Firms expect inflation to rise 2.4% next year. Factors such as consumer prices exceeding the Bank of Japan's 2% target, a slight economic expansion and the fastest wage growth since 1992 could provide the basis for the Bank of Japan to raise interest rates.
However, multiple reports suggest that the BoJ may not raise interest rates this month. According to Reuters, the BoJ wants to take more time to assess global risks and the wage outlook before making a decision. Bloomberg also said the BoJ may wait for new data before raising interest rates, leaving markets uncertain about the December meeting.
BoJ Governor Kazuo Ueda recently said that the time for a rate hike is approaching, but some dovish officials have urged caution. This has put further pressure on the Yen, pushing USD/JPY to new highs.
Meanwhile, data in the US showed that inflation remained high. The producer price index (PPI) rose 0.4% in November, higher than the previous month, and core annual inflation reached 3.4%, exceeding expectations. This could make the Fed more cautious, reduce the pace of future interest rate cuts, and continue to support the USD's appreciation.
Next week, the market will focus on important policy meetings of the Fed and the BoJ. In the meantime, investors tend to wait and avoid making major decisions.
According to Lao Dong, updated at 1:00 p.m. on December 13, the USD/JPY exchange rate is currently fluctuating around 152.894 USD/JPY, meaning 1 USD can be exchanged for about 152.8 JPY.
Update the latest Yen exchange rate HERE.
