The Japanese yen which has been steeply strong since November last year is shifted to a bearish trend. It was 22.6% weaker than the previous year, but it was 14.3% stronger from November to the end of January this year. Internally, December 20th Bank of Japan’s yield curve control policy (YCC) adjustment announcement supports a strong yen. In the aftermath of the strong performance, the yen also turned weak again.
There are pressures of the yen’s strength due to the prospect of monetary policy adjustment by the Bank of Japan. Although it is increasing, external conditions are mixed with bullish and bearish factors. In April, Japan is among largely modest economic and price indicators. The appointment of the bank’s new governor has raised expectations for monetary policy adjustment, which has served as a factor in the yen’s strength. Japan’s economy has maintained a modest growth this year, and upward pressure on prices has increased.
As it grows, the Bank of Japan’s current easing monetary policy needs to be adjusted. Japan’s economy will see private consumption, service exports drive economic recovery. The Bank of Japan said in January that it had forecast fiscal year 23 to 1.7% from its 22.10 forecast of 1.9% downgrade. The influx of overseas tourism to Japan help recover domestic demand, which resumed after the reopening in October, ’23. It is expected to continue to serve as a major upward factor in the Japanese economy. In the case of prices, the growth rate of the core CPI (excluding fresh foods) that the Bank of Japan values is ‘23.1(4.2%) hit a 41-year high on. However, due to the wage increase that President Kuroda repeatedly emphasized continuation of achieving 2% price target.
