Yen Exchange Rate Hits Back Against the Dollar

The yen exchange rate seems like it may start recovering after a rather poor weak. In terms of yen to dollars, the pair has managed to move below 150.50, ending at around 150.30 this Friday. This means the pair has been moving downwards for 2 days in a row. There may be several reasons for this. The market is mainly in a soft risk tone, so people do not have to be as careful with their funds. As interest rates are likely to not rise, according to recent data, they have improved market sentiment in this regard.

The labour market in the US has shown some considerable developments. Initial Jobless claims for the start of November rose to 231K, up from the expectations of 220K. This is the highest level it has been at in 3 months. Furthermore, jobless claims for the start of November are at their highest point since 2022. This figure rose to 1.865 million from 1.833 million, giving analysts reason to worry.

The BoJ has also been espousing a more dovish stance when it comes to supporting the yen coin. For the time being, the central bank will stick to loose monetary policy, according to the BoJ governor. The main concern for the bank is lowering inflation, preferably down to 2% if possible, to achieve stability.

Therefore, the government only cares about controlling instability in the FX market. There is no specific level that they want to keep the yen exchange rate. Otherwise, they are unlikely to intervene, according to their statements. They also stated that excessive weakening of the yen would also be grounds to consider an intervention.

Reports say that the CPI data for October in Japan, which is coming soon, indicates that it will be around 3.0%. This would be a rise from the previous 2.8% from the prior month. So, there is definitely some way to go to reduce inflationary pressure.