As the yen’s weakness and the dollar’s strength continue, the yen has remained near its lows even after government intervention, including coordinated intervention by Japan and the United States. Some market participants believe that the yen’s weakness has now peaked, and there are indications that the currency could gradually turn higher over the medium to long term.
Persistent pressure for a weaker yen and stronger dollar continues in the foreign exchange market. Crude oil prices have risen following the deterioration in the Middle East situation, while expectations of interest-rate hikes have spread among countries as inflation rises globally. In Japan, the yen has continued to weaken amid lingering concerns over expansionary fiscal policy.
In July, the yen temporarily approached approximately ¥164 to the dollar, prompting an unusual response from Japan’s monetary authorities in the form of yen-buying intervention and coordinated intervention by Japan and the United States. The yen has remained near its lows even after the intervention, with any rebound limited to a short-term move.
Some market participants believe that the yen’s weakness may have peaked, but the possibility of further exchange-rate volatility cannot be completely ruled out, and continued monitoring is considered necessary.
The yen’s weakening trend reflects multiple factors, including higher energy prices, upward pressure on consumer prices and movements in interest-rate differentials. The yen is expected to remain susceptible to developments involving the government and the Bank of Japan, as well as international conditions.