The Japanese yen remained weak at around 150.7 per dollar on Tuesday, hovering near a three-week low as the greenback strengthened on the back of solid U.S. economic data and rising expectations that President Donald Trump may adopt a more selective approach to tariffs.
Japanese yen holds losses against strong dollar
While investors welcomed signs that not all proposed tariffs would take effect immediately, Trump’s pledge on Monday to impose levies on automobiles, pharmaceuticals, and other industries fueled concerns about potential risks to key Japanese exports, particularly in the auto sector, which is a major driver of Japan’s economy.
Domestically, minutes from the Bank of Japan’s (BOJ) January meeting indicated that policymakers remain open to additional interest rate hikes, contingent on wage growth and inflation trends. One board member suggested that the policy rate could reach 1% in the second half of fiscal 2025, underscoring the central bank’s cautious yet evolving stance on monetary tightening. However, with inflationary pressures still uncertain and the yen under persistent depreciation pressure, the BOJ has maintained a measured approach.
BoJ developments in focus
Last week, the central bank kept its policy rate steady at 0.5%, with officials emphasizing the need to closely monitor global economic developments, particularly the potential fallout from higher U.S. tariffs and their impact on Japan’s export-driven economy. Additionally, speculation over possible currency intervention by Japanese authorities has intensified as the yen remains near levels that previously prompted government action. Market participants continue to watch for signals from the BOJ and Japan’s finance ministry, as any sharp depreciation in the yen could prompt intervention to stabilize the currency.
