Exchange Rate in Japan
Japan - Exchange Rate
Trump’s victory and Fed’s hike prompt sharp depreciation of yen
The Japanese yen (JPY) has been depreciating sharply against the U.S. dollar since Donald Trump’s victory in the 8 November presidential election and, in particular, following the United States Federal Reserve’s decision to raise its benchmark interest rate at the 13–14 December meeting. On 15 December, the JPY marked the weakest reading since February this year; it traded at JPY 118.2 per USD. This was 8.2% weaker than the level observed on the same day in November. That said, on an annual basis, the Japanese yen still gained 2.9% against the greenback.
The sharp weakening of the yen mostly reflects expectations that Trump’s policies will boost growth in the world’s largest economy via stronger fiscal stimulus and that the Federal Reserve will have to hike rates, thereby widening U.S.–Japanese interest rate differentials. This situation contrasts with the dynamics observed earlier this year, where rising risk aversion due to an uncertain global outlook had led the yen to strengthen to a nearly three-year high.
If sustained, the depreciation of the yen could cause a rebound in exports, translating into an improvement in businesses’ earnings, higher inflation, and stronger investment and manufacturing activity. Nevertheless, Trump’s unclear policy plans will cast a long shadow on the yen’s performance in the coming months.
FocusEconomics Consensus Forecast panelists expect the yen to trade at 117.7 per USD by the end of 2017. For 2018, the panel projects that the yen will weaken to 119.4 per USD.
Japan - Exchange Rate Data
|Exchange Rate (vs USD)||76.96||86.75||105.3||119.7||120.3|
5 years of economic forecasts for more than 30 economic indicators.
Japan Exchange Rate Chart
Source: Thomson Reuters
|Bond Yield||0.08||14.29 %||Jul 26|
|Exchange Rate||111.2||-0.64 %||Jul 26|
|Stock Market||20,050||0.48 %||Jul 26|
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July 24, 2017
The Nikkei Flash Manufacturing Purchasing Managers’ Index (PMI) fell from June’s revised 52.4 (previously reported: 53.1) to 52.2 in July.
July 20, 2017
The Bank of Japan (BoJ) left its monetary policy stance at its 19–20 July meeting, voting to continue with its program of Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control as long as is necessary to achieve and maintain its 2.0% inflation target.
July 20, 2017
Nominal exports valued in yen increased 9.7% from the same month last year in June, following May’s 14.9% increase.
July 10, 2017
Core machinery orders (a leading indicator of capital spending over a three- to six-month period) declined for the second consecutive month in May, casting doubts about the strength of firms’ capital spending.
July 3, 2017
According to the Bank of Japan’s quarterly Tankan business survey, sentiment among large manufacturers jumped to the highest level since Q1 2014.