Persistent Yen weakness fuels speculation of Tokyo intervention amid low interest rates and rising Oil prices.
The Japanese Yen edged higher against the USD on Thursday, trading at 162.45, though it remains close to multi-decade lows. A marginally softer US Dollar provided modest support, but structural pressures, including Japan’s low interest rates and fiscal concerns, continue to weigh on the currency.
Japan’s debt-to-GDP ratio and deteriorating fiscal outlook remain key headwinds, with officials emphasizing the need to restore market confidence. Chief Cabinet Secretary Minoru Kihara stated the government is monitoring markets with urgency. Meanwhile, rising Oil prices due to US-Iran tensions add further pressure, as Japan’s energy imports heighten inflation risks.
Markets are pricing a 63% chance of a Federal Reserve rate hike in September, reinforcing expectations of tighter US monetary policy. The combination of geopolitical risks and divergent central bank policies keeps the Yen under strain.