According to FXStreet, on October 21, the Japanese Yen (JPY) continued to increase against the US Dollar (USD), maintaining its recovery momentum.
The JPY's rise is largely due to recent statements from the Japanese government to support the currency.
A senior Japanese official, Atsushi Mimura, warned against speculative trading and said the government was closely monitoring foreign exchange fluctuations. In addition, Deputy Chief of the Japanese Cabinet Office Kazuhiko Aoki stressed that the stability in currency movements reflected the gradually improving economic fundamentals.
These comments raised the possibility of Japanese government intervention to support the yen.
However, BoJ Governor Kazuo Ueda warned that Japan's economic recovery outlook remains highly uncertain and that attention should be paid to the market's impact on the economy.
This, along with Japanese Prime Minister Shigeru Ishiba's opposition to further interest rate hikes, suggests the BoJ will be in no rush to adjust monetary policy ahead of the October 27 election.
Global political tensions also helped the JPY gain as it is seen as a safe-haven currency during times of uncertainty. However, uncertainty over whether the Bank of Japan (BoJ) will raise interest rates has kept the JPY from gaining further ground.
Israeli airstrikes in Lebanon and Gaza have increased tensions in the Middle East, while 10-year US Treasury yields remain high on expectations that the Fed could cut interest rates by 0.25% in November. These factors could continue to influence the USD/JPY pair.
On the other hand, the US Federal Reserve (Fed) is expected to cut interest rates slightly next year, keeping US government bond yields high. This puts pressure on the JPY, as it has lower interest rates, and together with the positive trend of the USD, could support the USD/JPY pair.
Therefore, despite the appreciation of the Yen, investors are still cautious before affirming that the JPY will continue to appreciate in the coming time.
According to Lao Dong, at 2:00 p.m. on October 21, the USD/JPY exchange rate is currently fluctuating between 149.09-149.65 JPY/USD.
