USD/JPY Breaks 163, Market Warns of Japanese Intervention
The Japanese yen weakened sharply again against the US dollar on Wednesday (July 22nd). The Japanese currency broke through 163 per US dollar, falling to its lowest level since October 1986.
This weakening has reawakened the market's concern about possible Japanese government intervention to maintain the yen's exchange rate. Pressure on the yen has increased as tensions in the Middle East have driven up oil prices.
Rising oil prices are a burden on the Japanese economy because the country is heavily dependent on energy imports from the Middle East. This situation has led the market to assess the potential for increased pressure on Japan's trade balance and imported inflation.
In addition to oil, the strengthening US dollar and rising Treasury yields have also put pressure on the yen. The still-wide interest rate differential between Japan and the United States also continues to encourage carry trade strategies, keeping the yen under selling pressure.
In terms of market impact, a weaker yen could increase the risk of Tokyo intervention and trigger sharp volatility in the USD/JPY. Additional pressure also comes from Japan's fiscal concerns after the government announced large spending plans, while the Bank of Japan remains cautious about policy normalization. Japan's trade deficit in June also increased pressure on the yen. (asd)
Source: Newsmaker.id
