26.06.202603:02:38UTC+00Yen Stays Near 40-Year Low

The Japanese yen traded around 161.7 per dollar on Friday, hovering near its weakest level since 1986, even as data showed that Tokyo’s core inflation accelerated for the first time in eight months. The inflation uptick has strengthened expectations that the Bank of Japan will continue raising interest rates. On Wednesday, BOJ Governor Kazuo Ueda reiterated his intention to proceed with further rate hikes in line with economic, inflation, and financial conditions. The following day, hawkish board member Naoki Tamura also signaled support for raising rates every few months. The BOJ is scheduled to announce its next policy decision on July 31.

Despite repeated verbal warnings from Japan’s Ministry of Finance and record-scale currency intervention in recent weeks, the yen has remained under pressure. A stronger US dollar and the wide interest rate differential with the United States continue to weigh on the currency, while the Federal Reserve is still expected to raise rates later this year.