The Japanese yen weakened in Asian trading on Wednesday against a basket of major and minor currencies, continuing to move in negative territory for the second consecutive day against the US dollar, amid active buying of the US currency, which extended its gains to a one-week high after the Federal Reserve minutes showed a sharp division among officials over cutting interest rates in December.
In the last trading sessions of 2025, currency markets were mostly quiet due to low liquidity caused by the New Year holidays, as traders looked ahead to the future after a bad year for some major currencies, most notably the US dollar.
Price overview
Today's Japanese Yen exchange rate: The dollar rose against the yen by 0.2% to (156.64 ¥), from today's opening price of (156.33 ¥), and recorded a low of (156.30 ¥).
The yen ended Tuesday's trading down 0.2% against the dollar, its second loss in the last three days, due to the Federal Reserve minutes.
US dollar
The dollar index rose more than 0.1% on Wednesday, extending its gains for the second consecutive session and hitting a one-week high of 98.33 points, reflecting the continued rise in the US currency against a basket of global currencies.
According to the minutes of the Federal Reserve’s most recent meeting, held on December 9-10, the US central bank agreed to cut interest rates after an in-depth discussion about the risks facing the US economy.
The minutes revealed that the decision to cut interest rates by 25 basis points to a range of 3.75%, the lowest level since 2022, faced significant opposition, with 9 members voting in favor and 3 against, the largest number of defections since 2019.
The minutes indicated the US Federal Reserve's inclination towards caution in upcoming meetings, with some participants suggesting that holding interest rates steady for a period of time after the December cut would be the most appropriate option.
The Federal Open Market Committee projected only one more interest rate cut throughout 2026, indicating a more cautious and hawkish approach compared to previous forecasts.
According to the CME Group's FedWatch tool: Pricing the probability of US interest rates remaining unchanged at the January 2026 meeting is currently stable at 84%, and pricing the probability of interest rates being cut by about 25 basis points is stable at 16%.
Japanese interest rate
On Monday in Tokyo, a summary of opinions from the Bank of Japan’s latest monetary policy meeting, held on December 18 and 19, was released, which resulted in raising the interest rate to 0.75%, the highest level since 1995.
The report revealed a clear hardening shift among most board members, with many indicating the need for further interest rate hikes in the future. They agreed that raising interest rates gradually and reducing monetary stimulus is necessary to ensure long-term price stability.
The pricing in the probability of the Bank of Japan raising interest rates by a quarter of a percentage point at its next January meeting remains stable at around 20%.
In order to reprice those probabilities, investors are awaiting further data on inflation, unemployment and wage levels in Japan.
