USD/JPY plunged temporarily to the ¥155 range in August following coordinated intervention by Japan and the United States, then rebounded to around ¥160. The focus in September will be whether the situation in which rising long-term interest rates in Japan lead to yen depreciation will continue.
In August, USD/JPY temporarily plunged into the ¥155 range against the backdrop of coordinated intervention by Japan and the United States, among other factors. The pair subsequently moved back toward ¥160 as the effect of the intervention began to fade. The backdrop included rising long-term interest rates in Japan, and the article presents the view that persistently high long-term interest rates provide justification for yen depreciation.
A key focus in September will be whether the pattern of “rising long-term interest rates in Japan leading to yen depreciation” will continue. The analysis also points to concerns about fiscal discipline as a potential factor driving long-term interest rates higher. In addition, monetary and financial developments in Japan and the United States, including measures by the U.S. Treasury to prevent long-term interest rates from rising, are highlighted as factors that could determine the market’s future direction.
Following the developments in August, the relationship between long-term interest rates and exchange rates, as well as the effects of intervention, has been examined. Future developments are expected to remain a focus of attention alongside concerns about Japan’s fiscal discipline.