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I confirm my intention to proceed and enter this websiteJapan announced the latest July core CPI annual rate excluding fresh foods rose 3.1% year-over-year, slightly down from 3.3% in the previous month.
The figure matched with the Bank of Japan’s expectation. The slowdown is linked to lower energy prices, especially data from the Tokyo region showing a slight deceleration in inflation.
(Japan’s inflation level in the past year)
The BOJ’s holding back on raising rates makes a sharp contrast to its peers. The Bank of Japan has taken steps to curb potential economic risks, including allowing long-term government bond yields to rise to 1%. However, the monetary policies have not prevented the yen from depreciation.
The exchange rate of USD/JPY began to fall in the past two days but remained above the high of 145. Over time, Japan’s low rate could lead to capital outflows, putting downward pressure on the yen.
(USD/JPY daily cycle, Ultima Markets MT4)
The future of the yen is not solely determined by Japan’s economic policies. External factors, such as global crises or recessions, can play a crucial role in shaping the currency’s fate. A crisis or recession might deter further rate cuts, yet the strength of the U.S. economy reduces this possibility.
Although the Japanese government could intervene the yen’s depreciation, its long-term course might remain unchanged. 150 marks a turning point. If USD/JPY rises above it, the Bank of Japan is expected to step into the market.
In summary, Japan’s inflation levels and the state of the global economy continue to be key determinants in the yen’s value. Under the current circumstances, the Bank of Japan’s easing policy is likely to support the trend of yen depreciation.
However, it’s essential to remember that external factors can still bring about short-term changes in this delicate balance.
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