Harvest Global Markets :

On Friday, the Japanese yen experienced a significant decline in value after the Bank of Japan (BOJ) opted to maintain negative interest rates at -0.1 percent. This decision came shortly after the Federal Reserve indicated that U.S. borrowing costs would remain elevated, exerting pressure on the Japanese currency and increasing the likelihood of government intervention. The yen reached as low as 148.42 against the dollar, edging closer to the 150 threshold, a point at which analysts have suggested that government intervention may be considered to support the currency.

During a press conference, BOJ Governor Kazuo Ueda stated that the central bank has not yet observed stable and sustainable inflation reaching their price target. Consequently, they will continue to uphold an extremely accommodative monetary policy until they are confident that inflation will consistently meet their 2 percent target. However, Ueda also acknowledged that policy adjustments could be made if they foresee the attainment of their target.

Speculation regarding potential intervention by the Tokyo government to bolster the yen has been growing. Japan’s Finance Minister, Shunichi Suzuki, cautioned against a yen sell-off that could negatively impact the trade-dependent economy and did not rule out any intervention options on Friday. Alvin Tan, head of Asia FX strategy at RBC Capital Markets, noted that explicit verbal intervention warnings from the Ministry of Finance indicate that intervention levels may be approaching.

Meanwhile, in the United States, the dollar index was poised for its tenth consecutive weekly gain following the Fed’s decision and weak economic data from France, which contributed to a decline in the euro. The dollar index increased by 0.16 percent to reach 105.55 on Friday and was expected to record a weekly gain of approximately 0.2 percent.