- The US dollar goes back to Yen, since the commercial agreement between the US and Japan promoted appetite for risk.
- Japanese Prime Minister ishiba has denied reports that suggest that he plans to resign in August.
- The vice governor of the BOJ, Uchida, expressed doubts about the short -term rates increases in the middle of the persistent commercial uncertainty.
The recovery of the US dollar compared to Yen from minimum of 146.25 on Tuesday has been ephemeral, since the torque was limited in 147.15 before yielding previous profits. The dollar has retreated to the 146.60 area after the announcement of a commercial agreement between the US and Japan
From a broader perspective, the pair is doubting about minimum of two weeks after
A depreciation of almost 1% in the previous two days, with both coins in decline, since the commercial agreement between the US and Japan, announced earlier on Wednesday, increased the appetite of investors for risk.
The commercial agreement between the US and Japan is supporting Yen
Trump announced a “mass commercial agreement” with Japan in its social truth network, which reduces tariffs on Japanese products to 15% from 25% previously announced in July, while Japan is expected to invest 550,000 million dollars in the US.
Something later, Japan’s prime minister, Shigeru Ihiba, denied rumors of local media that suggested that he would resign in August as a result of the defeat in the parliamentary elections of last weekend, which has relieved concerns about political uncertainty and provided additional support to the YEN.
On the other hand, the vice governor of the BOJ, Uchida, reiterated the cautious posture of the bank on interest rates, citing the persistent uncertainty about the impact of US tariffs on economic growth, which generates doubts about the time of the next rise in rates and hinders a stronger recovery of the YEN.
BANCO DE JAPAN – FREQUENTLY QUESTIONS
The Bank of Japan (BOJ) is the Japanese Central Bank, which sets the country’s monetary policy. Its mandate is to issue tickets and carry out monetary and foreign exchange control to guarantee the stability of prices, which means an inflation objective around 2%.
The Bank of Japan has embarked on an ultralaxa monetary policy since 2013 in order to stimulate the economy and feed inflation in the middle of a low inflation environment. The bank’s policy is based on the Quantitative and Qualitative Easing (QQE), or ticket printing to buy assets such as state or business bonds to provide liquidity. In 2016, the Bank redoubled its strategy and relaxed even more policy by introducing negative interest rates and then directly controlling the performance of its state bonds to 10 years.
The massive stimulus of the Bank of Japan has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to combat inflation levels that have been in historical maximums. Japan Bank’s policy to maintain low types has caused an increase in differential with other currencies, dragging the value of YEN.
The weakness of the YEN and the rebound in world energy prices have caused an increase in Japanese inflation, which has exceeded the 2% objective set by the Bank of Japan. Even so, the Bank of Japan judges that the sustainable and stable achievement of the 2%objective is not yet glimpsed, so an abrupt change of current monetary policy seems unlikely.
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
