JPY is preparing for a new declining wave. Overview for 22.08.2023

The Japanese yen, paired with the US dollar, is once again ready for devaluation. The current USDJPY exchange rate stands at 146.05.

Last week, the Japanese Ministry of Finance sent cautionary letters regarding the recent weakening wave of the Japanese Yen. It seems the ministry has transitioned to a new stage of intervention strategies: shifting from financial measures to verbal cautionary messages, and then from verbal warnings to written ones. The magnitude of this influence has diminished.

The market believes that the BoJ might resort to tangible interventions once the dollar breaches the 150-yen mark. Until then, they will limit themselves to verbal communication.

The JPY weakness is strategic: it is founded on a significant difference in interest rates between the BoJ’s stance and that of key CBs. The BoJ continues to maintain a negative interest rate, while the Federal Reserve demonstrates its intention to further increase it.

In the given context, the yen’s decline is inevitable.