Yen exchange rate today
According to Lao Dong, the Japanese Yen (JPY) suddenly weakened in today's trading session despite recovering from its low in the previous session, pushing the USD/JPY exchange rate up to 149.50. The latest update at 1:00 p.m., the USD/JPY exchange rate is currently fluctuating around 149.504 USD/JPY; meaning 1 USD can be exchanged for about 149 JPY.
The main reason was the slowdown in Japan's national consumer price index (CPI) in February, putting downward pressure on the JPY. Meanwhile, the US Dollar (USD) received support from the US Federal Reserve's (Fed) forecast of only cutting interest rates twice this year, each time by 25 basis points.
Salary increase in Japan, BoJ has more room to raise interest rates
According to FXStreet, the JPY's strong depreciation is still limited by expectations that the Bank of Japan (BoJ) will continue to raise interest rates thanks to strong wage growth, which could boost consumer spending and inflation. Preliminary results from Japan's spring salary negotiations show that businesses have agreed to demand a strong salary increase for the third consecutive year. This could give the BoJ more room to continue adjusting monetary policy.
Meanwhile, Fed Chairman Jerome Powell stressed that the Fed is still expected to cut interest rates twice this year, but also warned that tariffs could slow down the pace of US economic growth. In addition, the Fed has lowered its growth forecast due to concerns about the impact of President Donald Trump's trade policies. The policy difference between the BoJ and the Fed could hold back any strong gains from USD/JPY in the short term.
Geopolitical tensions escalate to support the Yen
On the geopolitical front, according to Reuters, tensions are still rising as Ukraine attacks Russia's English air base with drones, causing fires and large explosions. At the same time, Russia has launched more than 170 drones into Ukrainian territory.
At the same time, in the Middle East, Israel resumed airstrikes in the Gaza Strip, breaking a ceasefire with Hamas, leading to rocket retaliatory attacks. These developments increase geopolitical tensions and strengthen the safe-haven role of the Japanese Yen.
