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by USDJPY Fundamental Analysis – The Japanese yen has reached a precarious position, nearing a 34-year low at approximately 154.7 to the dollar. This critical level is close to 155, a psychologically important point that could trigger intervention by government authorities to stabilize the currency.
This potential intervention is on the radar due to the yen’s significant position in global currency markets.
International Collaboration on the Horizon?
Amid the decline of the yen, speculation exists about a coordinated effort between Japan, the United States, and South Korea to support the Japanese currency. Recent discussions in a trilateral meeting, where the U.S. expressed severe concerns about the currency’s movements, have fueled these rumors. This collaboration could involve strategic actions to bolster the yen significantly if it weakens.
Bank of Japan’s Stance
Attention is now on the Bank of Japan’s (BOJ) upcoming policy decision. It is widely anticipated that the BOJ will maintain its current monetary policies. However, BOJ Governor Kazuo Ueda, at the recent G20 summit, indicated that the central bank might consider raising interest rates if the yen’s depreciation leads to prolonged inflation through increased import costs.
The BOJ’s upcoming quarterly report is expected to reveal how the yen’s weakness has impacted the Japanese economy, providing crucial data for future policy decisions.
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