Japanese Yen fails to capitalize on rising bond yields and intervention as USD/JPY rebounds above 159 despite BoJ rate hike expectations.
The Japanese Yen remains under pressure as USD/JPY recovers to 159.25, erasing earlier losses despite a weaker US Dollar. The pair had briefly dipped to 158.85 following joint intervention by Japan and the US, which pushed it toward 155.00 last week.
Japanese government bond yields climbed to 2.93%, their highest since 1996, as inflation concerns mount due to a weaker Yen and elevated energy prices. The Bank of Japan is now expected to raise interest rates as early as September, though higher yields also raise fiscal concerns given Japan’s heavy debt burden.
Despite these factors, the Yen struggles to gain traction, with import costs rising amid Middle East tensions and restricted shipping routes keeping oil and gas prices elevated. Japan’s reliance on imported energy leaves its economy vulnerable to global price swings.