The Yen has continued its downward trend, reaching new lows against the US Dollar. This decline is primarily attributed to the widening gap in monetary policy between the Federal Reserve, which is aggressively raising interest rates to combat inflation, and the Bank of Japan, which maintains its ultra-loose monetary policy.
Market analysts are closely watching for any signs of intervention from Japanese authorities to support the Yen. Previous interventions have involved direct purchases of Yen in the foreign exchange market.
Several factors contribute to the Yen’s weakness:
- The Bank of Japan’s commitment to maintaining low interest rates.
- Rising US Treasury yields, making the Dollar more attractive to investors.
- Global economic uncertainty, leading to increased demand for the safe-haven Dollar.
The Yen’s depreciation has implications for the Japanese economy, potentially boosting exports but also increasing the cost of imports, particularly energy. The situation remains dynamic, and further developments are expected as market participants assess the potential for intervention and the evolving global economic landscape.
