Japanese Economy Minister Ryosei Akazawa announced Thursday that an agreement has been reached to convene a second meeting with United States representatives this month. During discussions with U.S. counterparts, Minister Akazawa conveyed Japan’s desire for a mutually beneficial resolution to outstanding issues as expeditiously as possible and reiterated a strong request for the removal of tariffs imposed on Japan. The parties concurred on scheduling a follow-up meeting within April. Minister Akazawa clarified that foreign exchange matters were not addressed during the discussions. He expressed his belief that the U.S. aims to finalize an agreement within the stipulated 90-day timeframe.
As of the time of reporting, the USD/JPY pair exhibited a 0.22% increase, trading at 142.22.
Japanese Yen FAQs
What key factors drive the Japanese Yen?
The Japanese Yen (JPY), a prominent global currency, is influenced by the performance of the Japanese economy, the Bank of Japan’s (BoJ) monetary policy, the yield differential between Japanese and U.S. bonds, and overall risk sentiment among traders.
How do the decisions of the Bank of Japan impact the Japanese Yen?
The BoJ’s mandate includes currency control, making its policy decisions crucial for the Yen’s valuation. While the BoJ has intervened in currency markets to depreciate the Yen, such actions are infrequent due to political considerations with major trading partners. The BoJ’s ultra-loose monetary policy from 2013 to 2024 contributed to Yen depreciation due to policy divergence with other central banks. Recent adjustments to this policy have provided some support to the Yen.
How does the differential between Japanese and US bond yields impact the Japanese Yen?
The BoJ’s sustained ultra-loose monetary policy over the past decade led to a widening policy divergence with central banks like the U.S. Federal Reserve, increasing the differential between 10-year U.S. and Japanese bond yields, favoring the U.S. Dollar against the Yen. The BoJ’s 2024 decision to gradually unwind this policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
How does broader risk sentiment impact the Japanese Yen?
The Japanese Yen is often regarded as a safe-haven asset. During periods of market instability, investors tend to allocate capital to the Yen due to its perceived reliability and stability. This increased demand typically strengthens the Yen’s value against currencies considered riskier investments.
