Japan’s current account surplus hits record levels, but geopolitical risks and energy prices weigh on JPY.
The Japanese Yen weakened beyond 160.00 against the US Dollar, defying expectations of a Bank of Japan rate hike. Despite a historic current account surplus and anticipated monetary tightening, broader macro pressures overshadow domestic fundamentals.
Analysts cite elevated global energy prices and geopolitical tensions, particularly involving Iran, as key drivers suppressing the Yen. While Japan’s trade fundamentals show strength, market focus remains on external shocks rather than domestic improvements.
Investors have already priced in the BoJ’s upcoming policy adjustments, limiting their impact on sentiment. Major institutions forecast continued near-term weakness for the currency.