The Japanese yen continued its decline against the US dollar on Tuesday as investors questioned whether the Bank of Japan (BOJ) will raise interest rates quickly enough to narrow the gap with other major economies.
The yen fell 0.22% to 157.70 per dollar, putting it on course for a third consecutive session of losses. The currency has retreated from a seven-month high reached earlier in September, despite the BOJ raising interest rates last week.
Investor concerns have increased after two BOJ policymakers pushed for a more cautious approach to monetary tightening. Markets currently price in about a 30% chance that the central bank will raise its benchmark rate to 1.5% in October.
The yen is also facing pressure from the US Federal Reserve and other central banks, which have maintained or increased interest rates, keeping yields on dollar-denominated assets relatively attractive.
Japan’s authorities remain concerned about excessive currency movements and have previously intervened to support the yen. However, investors remain focused on whether the BOJ will accelerate its tightening cycle.
The yen’s weakness could increase the cost of imported goods and energy for Japan, potentially complicating the central bank’s efforts to manage inflation while supporting economic growth.
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