Yen Backslides Against The US Dollar

This is the weakest JPY/USD performance since the mid-1990s. All eyes are now on the Bank of Japan (BOJ) as the markets expect some intervention from this monetary policymaker to bolster the yen.

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This currency’s weakness sparked market angst as the Japanese finance minister, Shunichi Suzuki, previously indicated that the government and policymakers would react as needed to JPY fluctuations. On 19 March 2024, Japan upped its interest rate for the first time in 17 years to strengthen the yen. However, this rise still places Japan as one of the major economies with lower interest rates.

Reuters reported that Takao Ochi, an official from the senior ruling party, indicated that further JPY falls between 160 and 170 may “be deemed excessive and could prompt policymakers to consider some action”.

However, according to Reuters, markets are sceptical about these remarks from Japanese corners. Reuters quoted Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, who said:

The market continues to think that the Bank of Japan has this line in the sand. It was going to be 152, then it was 155. But because the BOJ (Bank of Japan) is not showing up now, it’s now 160.

In contrast to the weakening JPY, the USD climbed back somewhat after slipping in the wake of the publication of April 2024’s Purchasing Manager Index (PMI), which indicated lethargic business movements.