The Japanese yen has weakened further against the U.S. dollar, with the USD/JPY pair surpassing the 154.00 mark. This depreciation is primarily attributed to the widening interest rate differential between the United States and Japan. The Federal Reserve’s commitment to maintaining higher interest rates contrasts with the Bank of Japan’s continued ultra-loose monetary policy, making the yen less attractive to investors seeking higher yields.
Additionally, Japan’s trade balance has remained in deficit, exerting downward pressure on the yen. The country’s reliance on energy imports, coupled with rising global energy prices, has exacerbated the trade deficit, further weakening the currency.
Analysts suggest that unless the Bank of Japan adjusts its monetary stance or there is a significant shift in global economic conditions, the yen may continue to face depreciation pressures against the dollar. Investors are advised to monitor upcoming economic indicators and central bank communications for potential policy changes that could influence currency movements.
