The Japanese yen weakened past 142 per dollar on Thursday, pulling back from multi-month highs as the US dollar regained strength following hawkish remarks from Federal Reserve Chair Jerome Powell.
Japanese yen eases as dollar rebounds
Speaking at an economic forum, Powell signaled that the Fed is in no rush to lower interest rates, citing persistent uncertainties around US trade policy and warning that new or increased tariffs could drive inflation higher while simultaneously slowing economic growth. His comments dampened market hopes for near-term monetary easing and reignited dollar-buying across global markets, pressuring currencies like the yen.
On the domestic front, fresh economic data showed that Japan’s export growth fell short of expectations in March, weighed down by softer shipments to major markets such as China and the European Union. Exports of automobiles, electronic components, and machinery—all critical pillars of Japan’s trade sector—showed signs of weakness. Still, there were some encouraging signals, as a notable rebound in import growth hinted at underlying resilience in Japan’s domestic demand, particularly in sectors linked to energy, raw materials, and consumer goods.
Japan minister met U.S. counterparts
Meanwhile, Japan’s Economy Minister Ryosei Akazawa, currently in Washington for ongoing trade negotiations, stated that foreign exchange issues were not a topic of discussion during bilateral meetings. His remarks helped ease speculation that the yen’s recent volatility might provoke US criticism, particularly given past tensions over perceived currency management. Instead, Japan’s focus remains squarely on pushing for the complete removal of tariffs imposed under President Trump’s trade policies, including the 10% base tariff and an additional 25% levy specifically targeting Japanese car exports—a critical issue for Tokyo given the auto industry’s central role in the Japanese economy.
Looking ahead, the yen is likely to remain sensitive to shifts in US monetary policy expectations and developments in trade talks. Analysts caution that renewed tensions or tariff escalations could increase safe-haven demand for the yen, while progress in negotiations or further hawkish Fed signals could extend its recent decline. In parallel, markets will be closely watching for any signs that the Bank of Japan might adjust its own policy path in response to evolving economic conditions, adding another layer of complexity to the yen’s near-term outlook.
