The yen conversion rate against the dollar appears to be making a recovery recently. This is good news for Japan after the yen had reached over 150 against the dollar. The expectation is for the rate to fall to around 148 in the coming days and weeks. There are even further expectations to go down to around 146 later on.
The reason for this change is twofold. The US dollar has been in retreat recently, as investors seem uncertain about the Fed’s future plans for interest rates. Investors think that the Fed will very slowly lower them, but for now, it is certain that they will not raise them at least. This will have a fundamental impact on the dollar’s price.
At the same time, the yen exchange rate has been making a recovery. It has been at its lowest point for multiple years; things are finally looking positive for the Japanese currency. Yen investors will have to keep an eye on the inflation figures coming out of Japan this week. Those will have an impact on their future trading plans for the currency and how it will impact the yen conversion rate.
Currently, analysts and investors expect Japan’s national CPI data to show some improvement. They believe they will see core CPI data go up from 2.8% and end up at 3.0% for the year.
The BoJ has stayed very complacent for the past few months by even offering negative interest rates. This helped bring about the recent situation with the dismal performance of the yen conversion rate against other major currencies. An inflation increase would be good for Japan, quite different from traditional wisdom on inflation. The BoJ seems to be hoping that inflation will save them from deflation while they hold back from increasing interest rates as people buy the Japanese yen. It may seem that some of their policy measures may finally be making a difference.
