The Japanese yen fell in Asian trading on Wednesday against a basket of major and minor currencies, moving into negative territory against the US dollar, approaching a four-month low again. This comes after the release of trade balance data in Japan, which showed a stronger-than-expected increase in exports in October.
Japanese yen decline
The Japanese yen fell broadly in October, due to less aggressive comments from new Prime Minister Shigeru Ishiba, which reduced the chances of a Japanese interest rate hike in December.
- Japanese yen exchange rate today: The dollar rose against the yen by 0.3% to reach 155.14 yen, compared to the opening price of today's trading at 154.65 yen, and recorded a low of 154.52 yen.
The Japanese yen ended Tuesday's trading stable against the US dollar, after recording its highest level in a week at 153.27 yen earlier in the trading.
Japanese exports
Japan's exports rose 3.1 percent in October, trade ministry data showed on Wednesday, beating market expectations for a 2.2 percent gain, after falling 1.7 percent in September.
Exporters appear to have benefited from a broad decline in the Japanese yen in the foreign exchange market. The yen fell 5.8% against the US dollar in October, its biggest monthly loss since April 2022.
Japan’s new Prime Minister Shigeru Ishiba surprised markets last month by saying the economy was not ready for more interest rate hikes. However, he later softened his message, saying he would not interfere in the Bank of Japan’s policy.
Japanese interest rates
Bank of Japan Governor Kazuo Ueda said on Monday the central bank will continue to raise interest rates if economic developments and prices move in line with its expectations, but he did not say whether a hike could be made in December.
Following these comments, the probability of the Bank of Japan raising interest rates by a quarter percentage point at its December 19 meeting remained stable at 54%, little changed.
To reassess those prospects, investors are awaiting more Japanese data on inflation, wages and unemployment levels over the next month ahead of the upcoming meeting.
Japanese Yen Performance Forecast
“The recent weakness in the Japanese yen had many market participants expecting a hawkish stance from Ueda, but he ultimately stuck to his recent narrative,” said Rodrigo Catril, chief foreign exchange strategist at National Australia Bank.
“We believe the economy and price pressures make a strong case for a rate hike in December, but much will depend on whether there is any political backlash, given that the LDP is seeking to regain public support after a poor showing in the recent House of Representatives election,” Cattrell added.
