USD/JPY falls about 143.50 amid tariff concerns

  • The USD/JPY collapses to about 143.55 in the first Asian session on Friday.
  • A commercial war in climbing and uncertainty increase the demand for safe refuge, supporting the Japanese yen.
  • The hard line posture contributes to JPY’s rise.

The USD/JPY pair extends its fall to around 143.55 during Friday’s Asian negotiation hours, pressed by the weakening of the US dollar (USD). Uncertainty about tariff policy and concerns about global economic deceleration encourage investors to seek safe refuge coins such as Japanese Yen (JPY).

The president of the USA, Donald Trump, said Wednesday that he would temporarily reduce tariffs to dozens of countries, but increased the tariff to China from 104% to 125%. The imminent threat of both global and in the US, promoted by aggressive commercial policies and uncertainty about future measures, drags the dollar down.

Operators anticipate that the US Federal Reserve (Fed) will resume interest rate cuts in June and will probably reduce its policy rate at a complete percentage point by the end of the year. According to the CME Fedwatch tool, derivative markets now imply a 44% possibility that the Fed cuts rates at its next May 6-7 meeting, compared to 14% of a week ago.

Meanwhile, the hard line posture of the Bank of Japan (BOJ) marks a great divergence compared to the prospects for multiple trim of interest rates by the Federal Reserve (Fed). This, in turn, provides some support to the JPY and acts as a wind against for the pair.

Japan finance minister Shunichi Kato said early on Friday that exchange rates must be established by markets, adding that excessive volatility of the FX negatively impacts the Japanese economy.

And in Japanese faqs


The Japanese Yen (JPY) is one of the most negotiated currencies in the world. Its value is determined in general by the march of the Japanese economy, but more specifically by the policy of the Bank of Japan, the differential between the yields of the Japanese and American bonds or the feeling of risk among the operators, among other factors.


One of the mandates of the Bank of Japan is the currency control, so its movements are key to the YEN. The BOJ has intervened directly in the currency markets sometimes, generally to lower the value of YEN, although it abstains often due to the political concerns of its main commercial partners. The current ultralaxy monetary policy of the BOJ, based on mass stimuli to the economy, has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to fight against inflation levels of decades.


The position of the Bank of Japan to maintain an ultralaxa monetary policy has caused an increase in political divergence with other central banks, particularly with the US Federal Reserve. This favors the expansion of the differential between the American and Japanese bonds to 10 years, which favors the dollar against Yen.


The Japanese Yen is usually considered a safe shelter investment. This means that in times of tension in markets, investors are more likely to put their money in the Japanese currency due to their supposed reliability and stability. In turbulent times, the Yen is likely to be revalued in front of other currencies in which it is considered more risky to invest.

Source: Fx Street

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