Yen Weakens Overshadowed by Intervention Concerns
On Friday, the Japanese yen weakened against the US dollar despite potential intervention concerns raised by traders. Although the Bank of Japan (BOJ) raised interest rates last week, concerns about Japan's expansionary fiscal policy kept the yen at a disadvantage. The Japanese government also proposed record spending for the next fiscal year, but faces significant challenges in boosting an economy struggling with inflation remaining above the BOJ's target.
Consumer inflation data released on Friday showed that core inflation in Tokyo slowed in December but remained above the BOJ's 2% target. This further strengthens the case for further interest rate hikes. Meanwhile, BOJ Governor Kazuo Ueda reiterated that the BOJ is ready to continue raising interest rates, but the yen continues to face pressure. The Japanese government also issued a strong warning of its readiness to intervene if necessary to halt the yen's sharp decline.
Meanwhile, the US dollar weakened slightly against the euro and the pound sterling, although the prospect of a Federal Reserve rate cut in 2026 remains supportive. On the other hand, the cryptocurrency market recorded gains, with Bitcoin rising 0.5% to $88,288.
Source: Newsmaker.id
