Yen Exchange Rate Jumps up While the Dollar Retreats

The yen exchange rate has gained the upper hand against the dollar for 4 sessions in a row. Japan’s central bank seems to finally be on the path to raising interest rates. After keeping a very soft monetary policy for many months, the pressure markets are exerting on the yen is finally forcing them to make a move. Investors are now expecting the bank to make these changes as next year starts. Meanwhile, in the same period, investors are expecting US monetary policy to loosen as the Fed lowers interest rates.

Overall then, with this combination of expectations, it only makes sense that we would see a lower dollar and higher yen. At the current point, the US dollar is at its lowest point against the yen since September, with the yen conversion down by 0.61% from 147.6, where it was previously at 147.16. The end of negative interest rates is a promising prospect for many yen forex investors. Otherwise, in terms of yen to dollars, it is 0.0068.

The dollar has started lowering in general. The dollar index, a measurement of the Greenback of the dollar against a basket of 6 currencies, has already lowered. It is now at 103.17, lower by 0.13% from 103.32, its lowest point since August.

US bonds have also lowered with the prospect of the Fed lowering interest rates. With inflation lowering in the US, it seems as though high-interest rates will no longer be necessary.

They have been lowering for 4 sessions in a row, ending up at 4.39% as of Tuesday. Shortly beforehand, they had been at their highest point in 16 years, when it overcame 5.00% in the month of October. There is also the promise of a 20-year bond yield auction coming up.

The rally of other Asian currencies also has a considerable effect on the dollar, other than the yen exchange rate. The Chinese yuan reached a 4 month high against the dollar, putting considerable pressure on the US currency.