Japanese Yen Under Pressure Again
The Japanese Yen is under significant pressure, hovering around ¥154 per US dollar, one of its weakest levels in nine months.
The Bank of Japan (BoJ) is maintaining its low interest rate policy and has not shown any aggressive steps toward normalization, even though inflation in Japan is starting to show signs of rising.
The Japanese government, through Finance Minister Satsuki Katayama, issued a stern warning about foreign exchange market volatility after the Yen plunged to such a low level. "We are watching with a high degree of urgency for rapid one-way movements," Katayama said.
External factors: the strengthening of the US dollar and expectations that the Federal Reserve (The Fed) may delay interest rate cuts, have made the Yen, which tends not to offer high yields, less attractive as a store of value.
Japan's increasingly expansionary fiscal policy (large stimulus, potential for more debt issuance) has added to market concerns about the Yen, particularly in the context of the country's high debt burden.
For Japanese exporters, a weaker yen provides a competitive advantage because their products become cheaper in foreign currencies.
However, for investors holding yen-denominated assets or seeking to hedge against the yen, this is a warning signal due to the potential for coercive losses.
A weaker yen could also trigger intervention by Japanese authorities if the decline is deemed too rapid or uncontrolled, as implied by the Finance Minister's statement.
Source: Newsmaker.id
