The US dollar/Japanese yen exchange rate fell temporarily to the ¥155 range in August following coordinated intervention by Japan and the US, before returning to the ¥160 range as long-term interest rates rose. Concerns over fiscal discipline and the US Treasury’s measures to contain long-term interest rates affected the market, and the September range is expected to be around ¥155–¥163. The expected range for the first week is ¥158–¥162.
The US dollar/Japanese yen exchange rate initially moved toward yen depreciation in August, reaching the ¥155 range temporarily after intervention by Japan and coordinated intervention by Japan and the US. The yen then depreciated again in tandem with rising long-term interest rates, and the exchange rate is said to have ultimately returned to around ¥160. The intervention amount was estimated to have reached ¥15 trillion based on the reported figures.
The renewed yen depreciation against the backdrop of rising long-term interest rates has been attributed to concerns over fiscal discipline. Policy expectations surrounding funding for a consumption tax cut affected interest-rate trends, making the sustainability of fiscal discipline a focus for the yen exchange rate.
Market attention also focused on efforts to contain the rise in long-term interest rates, including the US Treasury’s doubling of its purchase operations. This prompted a short-term reaction toward a weaker dollar and stronger yen, but the relationship between interest-rate differentials is not uniform, leaving uncertainty over the outlook.
In September, attention will focus on monetary policy announcements in Japan and the US and intervention to prevent further yen depreciation. Although expectations of an additional Bank of Japan rate hike could help curb yen depreciation, the impact of the Japan-US interest-rate differential has weakened. The September US dollar/yen exchange rate is expected to remain in the ¥155–¥163 range, with ¥158–¥162 forecast for the first week.