The Japanese yen rose in the Asian market on Friday against a basket of major and minor currencies, for the first time in the last three days against the U.S. dollar, after consumer price data in Tokyo showed renewed inflationary pressure on monetary policymakers at the Bank of Japan.
The Japanese yen is on track for its second consecutive monthly gain, with more aggressive comments from Bank of Japan Governor Kazuo Oeda boosting the prospect of a third rate hike for the third time this year, which put heavy pressure on curry-yen deals.
Price outlook • Japanese yen exchange rate today: The dollar fell against the yen by 0.25% to (144.65 ¥), from the opening price of today’s trading at (144.98 ¥), and recorded the highest level at (145.07 ¥).
The Japanese yen lost 0.3% against the U.S. dollar on Wednesday, the second consecutive daily loss, after better-than-expected data on economic growth in the United States.
Core inflation in Tokyo rose 2.4% annually in August, from 2.2% in the previous month, data showed on Friday. Higher than market expectations a rise of 2.2%.
Prices in Japan are currently accelerating above the Bank of Japan’s inflation target of 2.0%, which boosts the prospect of further Japanese interest rate increases this year.
Monthly trading throughout July trading, which officially ends when prices settle today, the Japanese currency ‘yen’ is up so far by about 3.5% against the US currency ‘dollar’ is about to achieve its second consecutive monthly gain.
This new monthly gain is due to the continued dismantling of Curry Trade deals after the recent comments of the Governor of the Bank of Japan, and the full pricing of the prospects of a US interest rate cut in September.
A special session of Japan’s parliament was held last Friday to discuss the Bank of Japan’s unexpected decision to raise interest rates last month and the central bank’s abrupt shift toward normalizing monetary policy.
Bank of Japan Governor Kazuo Ueda told lawmakers that the rate hike at the July meeting is in line with the central bank’s economic outlook.Oida added that the central bank is ready to adjust monetary policy if the economy moves as planned.
Oeda explained that the recent adjustments in monetary policy were appropriate, and warned of sudden movements in the foreign exchange market and their negative impact on prices and wages in the country.
Ueda said that excessive fluctuations in the exchange rate affect inflation expectations, and that inflation risks remain bullish, and Oeda stressed that monetary easing should be adjusted if inflation matches expectations.
It is difficult to determine the exact level of neutral interest rates, and he stresses that a neutral interest rate can be achieved if the data matches expectations until 2026.
Read also :Euro moves in positive territory ahead of European inflation data
Following Ueda comments, traders still see a low chance of raising Japanese interest rates at the October meeting, but the odds of a further increase in Japanese interest rates in December rose to more than 70%.
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