The Japanese yen rose in the Asian market on Friday, continuing its move in positive territory for the second consecutive day against the US dollar. The rally came after the yen moved away from a four-month low, amid buying from cheap levels. Japanese authorities also issued new warnings about the excessive fall of the local currency, noting that the continued sharp depreciation of the yen could threaten economic stability. These warnings contributed to increasing positive trends towards the yen, pushing it higher during recent trading.
The move coincided with growing concerns about the repercussions of Donald Trump’s victory in the US presidential election on the Japanese economy. Trump’s victory reinforces expectations of an appreciation in the value of the US dollar, which puts additional pressure on the Bank of Japan. This situation increases the likelihood that the Bank of Japan will move towards raising interest rates in December, in an attempt to stop the yen’s continued deterioration and ensure its stability against other currencies.
Investors are watching closely follows the Bank of Japan’s moves in this context, as these decisions are expected to be decisive in determining the future direction of the Japanese currency. Today, the dollar fell 0.25% against the yen to 152.55 yen, compared to the opening price of 152.92 yen. The yen hit a high of 153.36 yen during the session. It is important to note that the yen ended Thursday’s trading up 1.1% against the US dollar, after earlier hitting a four-month low of 154.71 yen. The Japanese yen is showing remarkable resilience amid increasing pressure from global markets. Despite challenges from rising bullish outlook, the US dollar managed to partially recover from four-month lows.
The impact of interest rates on the movement of JPY
Interest rates are one of the main economic factors that significantly affect the movement of currencies, in particular the Japanese yen. The monetary policy of the Bank of Japan is one of the factors directly affecting the value of the yen, as the bank adjusts interest rates to stimulate the economy or reduce inflation.
A low interest rate is usually a factor that reinforces a currency’s weakness, while raising interest rates can strengthen the national currency. Although the Japanese yen is considered a safe currency for investors to turn to in times of economic crisis or volatility in financial markets, the monetary policy of the Bank of Japan is often more compared to other central banks, leading to significant effects on the exchange For example, if the Bank of Japan decides to keep interest rates low or even lower them, this could lead to a decline in the yen compared to other currencies, particularly The US dollar, which often rises when the US Federal Reserve raises interest rates.
Higher interest rates attract foreign investment, as investors prefer higher returns on their money. If the Bank of Japan raises interest rates, the yen is likely to rise as a result of these increased foreign investments, because foreigners will need to buy yen to finance their investments in Japanese assets. This, in turn, enhances the value of the Japanese currency against other currencies. However, although raising interest rates may support the yen in some cases, the economic challenges faced by the Japanese economy may limit the impact.
The impact of yen price changes on Japanese economy
Changes in the price of the JPY are among the factors that greatly affect the Japanese economy, as the exchange rate of the Japanese currency has direct effects on many aspects of the macro economy, ranging from exports to inflation levels and economic growth. Japan is one of the largest economies in the world and relies heavily on exports, so the movement of the yen in the currency markets has a significant impact on various industries and on the strategies of Japanese companies.
If the JPY rises significantly against other currencies, such as the US dollar, this could lead to a decline in the competitiveness of Japanese exports in global markets. As the yen becomes stronger, Japanese products become more expensive for foreign buyers, leading to a decline in demand for these products. In this context, Japanese export-dependent companies, such as automotive and electronics companies, may have difficulty maintaining their market share abroad, which could negatively affect their profits and growth. Economic.
On the other hand, if the JPY falls significantly, it could enhance the competitiveness of Japanese exports, as Japanese products become more attractive to foreign buyers due to their lower prices compared to goods produced in other countries. This can help stimulate demand for Japanese exports, thus boosting the growth of the Japanese economy. However, a weaker JPY may also lead to imported inflation, as imported goods become more expensive in Japan, which can lead to higher product prices.
Consumerism and affects inflation levels in the country. Moreover, JPY price changes affect Japanese companies in terms of production costs. Companies that rely on imported raw materials may face increased costs when the yen weakens, putting further pressure on profit margins.
