USDJPY Analysis – Yen Falls to 156 Against Dollar

The Japanese yen experienced another decline, falling to approximately 156 per dollar on Thursday. This drop comes after a brief rally to 153 per dollar in the previous session, which many believe was due to another suspected intervention by Japanese authorities. This marks the second suspected weekly intervention to bolster the yen’s value.

USDJPY Analysis – Yen Falls to 156 Against Dollar | 4-Hour Chart

Government’s Response to Currency Fluctuations

While the Japanese government has not confirmed its role in the yen’s recent fluctuations, the country’s top currency diplomat, Masato Kanda, hinted at potential government actions. Kanda mentioned that the government would disclose the results of these interventions at the end of next month and emphasized their readiness to take appropriate actions in the foreign exchange market as needed.

Additionally, there is speculation about new incentives for companies to convert their overseas profits into yen, possibly through tax breaks, to strengthen the currency.

Economic Background and Impact

The yen’s significant loss of over 10% against the dollar this year can be attributed to the Bank of Japan’s decision to maintain ultra-low interest rates. This monetary policy has encouraged traders to borrow yen at low costs to invest in currencies from countries with higher interest rates, thus increasing the supply of yen and reducing its value. The ongoing currency weakness challenges Japan’s economy, prompting the government to consider various measures to stabilize the yen.