- Overtime we’ve watched the Dollar lose it’s purshasing power due to rising inflation and money supply.
- with the technology power increasing it’s expected for the dollar to increase simultaneously but the value of the dollar has decreased so much.
- The relationship between Japanese yen intervention and Dollar stems from the interconnectedness of global currency markets.
- Dollar measures the value of the US dollar against a basket of major currencies, including the yen. When there’s an intervention in the yen, such as the Bank of Japan or the Japanese government stepping in and in this case to strengthen the yen, they will be SELLING USD and BUYING JPY.
- If Japan sells a significant portion of its US bond holdings, it might convert the proceeds back into yen, increasing the supply of US dollars in the market and potentially weakening the dollar relative to the yen and other currencies. This can lower the dollar value.
JPY still weakning after the Bank of Japan kept monetary policy Unchanged
A drop in Tokyo’s inflation rate to 1.6% could indeed raise concerns for the Bank of Japan (BoJ), especially if it falls below their target rate. Governor Ueda’s speech at the press conference may shed light on the BoJ’s stance regarding this situation. They might opt for intervention depending on various factors such as the overall economic health, monetary policy goals, and external pressures. It’ll be interesting to see how they respond.
