US Fed Chair Turns Hawkish! Experts Bluntly Say It Is “Hopeless” to Reverse the Yen’s Decline Even with a September Rate Hike by the Chronically Behind-the-Curve Ueda BOJ

The story

The dollar-yen exchange rate broke through ¥160 in the early hours of the 29th, and the yen continued to weaken even after the largest coordinated intervention to date.

The backdrop is stronger expectations of a rate hike in September following remarks by Fed Chair Warsh (ウォーシュ).

Chair Warsh (ウォーシュ) expressed firm determination, saying that “there is work to do” if inflation remains persistently high, and the widening interest-rate differential between Japan and the United States is said to have prompted selling of the yen.

While the view that Bank of Japan Governor Ueda Kazuo (植田和男) has been slow to combat inflation is spreading in the market, economic commentators say that differences in quantitative monetary policy between Japan and the United States will continue to weigh on the yen.

Experts say the prospects for reversing the yen's decline are poor unless there is a surprise rate hike at the September meeting.

At a glance

TimingIn the early hours of the 29th, the dollar-yen exchange rate broke through the ¥160 mark.

EventIn a speech, Fed Chair Warsh (ウォーシュ) signaled strong expectations of a rate hike, increasing the likelihood of a hike at the September meeting.

NatureThe interest-rate differential between Japan and the United States widened, while selling of the yen continued.

Company/PolicyWith Bank of Japan Governor Ueda Kazuo (植田和男) criticized for being slow to combat inflation, there is a view that differences in quantitative monetary policy between Japan and the United States will contribute to yen depreciation.

OutlookThe view is spreading among experts that it will be difficult to reverse the yen's decline unless there is a surprise rate hike at the September meeting.

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