Japan’s yen remains under pressure due to elevated energy prices and fiscal risks despite modest inflation softening in April.
The Japanese yen (JPY) continues to face downward pressure, driven by rising global interest rates and Japan’s high debt levels. April inflation data showed a slight decline, but the impact was muted due to a one-off effect from school fees, leaving underlying inflation trends unchanged.
Analysts note that persistent energy price increases, tied to geopolitical tensions, are straining the economy. While the Bank of Japan (BoJ) is expected to hike rates in mid-June, discussions of a supplementary budget have added to fiscal concerns, further weighing on the currency.
A resolution to the Iran conflict or a drop in oil prices could ease pressure, but until then, the yen is likely to remain weak.