Japanese Yen Drops as US Dollar Gets Stronger
On Tuesday, the Japanese Yen became weaker compared to the US Dollar. The USD/JPY rate went above 150. This happened after the Yen had a small rise earlier in the week.
One reason for the Yen’s fall is Japan’s budget plan for 2025/26. The government plans to spend less, about ¥115.2 trillion, and reduce new bond sales to ¥28.6 trillion. Because of this, returns on Japanese government bonds went down, making the Yen less attractive to investors.
Still, there is some hope for the Yen. The Bank of Japan might raise interest rates this year. BoJ Deputy Governor Shinichi Uchida said inflation is slowly reaching the 2% target, so rate increases are possible.
In the US, the Dollar stayed strong because of inflation worries. Recent data shows the US economy grew by 2.3% last quarter, and the GDP Price Index rose to 2.4%. These numbers suggest the Federal Reserve may keep interest rates steady to control inflation.
Impact: The Yen might stay weak if the US Dollar keeps getting stronger. But if Japan raises interest rates, the Yen could get stronger again soon.