Yen Weakens Despite Strong Japanese GDP
The Japanese yen weakened to near 159 per dollar on Tuesday (May 19), extending its decline to seven consecutive days. This decline occurred despite stronger-than-expected economic growth data. This occurred as the market reassessed policy direction and external risk factors that were not yet fully reflected in the data.
According to the data, the Japanese economy grew 0.5% in the first quarter of 2026, up 0.2% from the fourth quarter, beating the consensus estimate of 0.4% and marking the fastest pace since the third quarter of 2024. This data reinforced expectations that the Bank of Japan still has room to continue raising interest rates, although the outlook remains uncertain.
The uncertainty, particularly regarding the impact of the Middle East conflict, which has not yet been fully reflected in activity indicators, has led the market to reserve its assessment of the next growth trajectory. In this context, the yen continues to struggle to find a consistent catalyst for strengthening, despite the BOJ's relatively hawkish policy narrative compared to the previous period.
Market attention is also focused on the yen's proximity to the 160 per dollar area, the level that previously triggered stabilization measures by Japanese authorities in late April. Investors remain wary of potential further intervention after several Japanese officials stated there is no limit to how often authorities can intervene in the forex market, making the psychological level of 160 a key monitoring point. (asd)
Source: Newsmaker.id
