USD/JPY Stuck at 162.45, Risk of Japanese Intervention in Focus
The Japanese yen strengthened slightly against the US dollar on Thursday (July 9th), supported by a slight weakening of the greenback. The USD/JPY pair traded around 162.45, still near its 40-year high.
The yen's continued weakness has kept market participants wary of possible intervention by Japanese authorities. However, previous intervention efforts are considered to have had only a temporary impact due to persistent structural pressures, including Japan's low interest rates and a weakening fiscal outlook.
Japan's Chief Cabinet Secretary, Minoru Kihara, said the government aims to maintain market confidence by steadily lowering the debt-to-GDP ratio. He also emphasized that the government is monitoring market movements with a high degree of vigilance.
Additional pressure on the yen comes from the renewed tensions between the United States and Iran. The conflict has pushed up oil prices as security risks in the Strait of Hormuz once again overshadow the flow of crude oil supplies. Rising oil prices weigh on the yen because Japan is heavily dependent on energy imports, particularly from the Middle East.
In terms of market impact, the USD/JPY still has the potential to remain high as long as the interest rate differential between the United States and Japan remains wide. Expectations for a Fed rate hike in September, hovering around 63%, also limit US dollar weakness. If oil prices continue to rise, the yen could come under further pressure, while the risk of Tokyo intervention could trigger sharp and volatile movements in the currency market. (yds)
Source: Newsmaker.id
