Skip to content USDJPY Fundamental Analysis – 23-September-2024
The Japanese yen declined, reaching over 144 against the dollar (USD/JPY) during a session with fewer trades due to a holiday. This drop continues the pattern from the previous week, which saw the yen weaken as the Bank of Japan (BOJ) chose not to increase interest rates.
Despite market anticipation, the BOJ’s decision to maintain its policy rate at 0.25% came without surprises following a unanimous vote.
BOJ’s Cautious Stance
Last week, the yen depreciated by more than 2%, influenced by the BOJ’s steady approach to its monetary policy. During a press conference after the meeting, BOJ Governor Kazuo Ueda pointed out some economic challenges, adopting a slightly more cautious tone.
His remarks suggested that an interest rate hike in October might be unlikely, though an adjustment in December is still possible. Governor Ueda reiterated the central bank’s commitment to fostering a gradual economic recovery, emphasizing its readiness to modify easing measures, should its economic and inflation forecasts align with expectations.
External Factors Influencing the Yen
The yen also felt the impact of broader market movements, notably due to the Federal Reserve’s significant rate reduction. This cut improved the global economic forecast, sparking a surge in riskier assets.
Such external pressures contribute to the yen’s challenges as investors respond to shifts in the global financial landscape.
Concluding Thoughts
In summary, the Japanese yen’s recent weakness can be attributed to domestic and international factors. Domestically, the Bank of Japan’s cautious stance on interest rates, highlighted by Governor Ueda’s comments, suggests a careful navigation of economic recovery.
Internationally, movements in global markets, primarily the Federal Reserve’s actions, continue to influence the yen’s strength. Investors and market watchers will likely keep a close eye on these developments as they unfold, affecting decisions in currency investments.
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