Japan has once again intervened in the currency market to support the weakening yen, raising concerns over the currency’s volatility and potential impact on the economy. The move comes as the yen hits 38-year lows, with authorities worried about the impact of rising inflation and weakened purchasing power.
Data released by the Bank of Japan suggests Tokyo spent 2.14 trillion yen ($13.5 billion) intervening on Friday, potentially bringing the total amount spent last week to nearly 6 trillion yen. The intervention, while not officially confirmed, appears similar to the one undertaken on May 1st. In both instances, intervention took place when the dollar was already weakening against the yen, suggesting concern over the yen’s level rather than the speed of its decline.
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Analysts are now focused on the Bank of Japan’s upcoming policy meeting, scheduled for late July. Some traders speculate that the central bank may raise interest rates from current near-zero levels, a move that could help curb the yen’s depreciation. A weak yen, while beneficial for exporters, has become a source of concern for Japanese policymakers, as it fuels inflation by making imports more expensive.