The dollar yen and cross yen are rising this week. The flow of yen selling is becoming stronger. As the yen’s reaction to risk alerts such as stock prices slows, US and European financial officials have made a series of statements to further strengthen inflation alerts. The dollar buying movement has spread as Fed director Waller proposed raising rates by 50bp at several meetings in the future. In addition, the ECB has indicated that it will start raising interest rates in July and eliminate negative interest rates by the end of September. Some members also said that they should consider raising the interest rate by 50bp. In response to this, there was a scene where the cross yen such as the Euroyen rose.
The other day, the Governor of the Bank of Japan Kuroda mentioned the keyword of the exit strategy, and there was a scene where the yen exchange rate reacted sensitively, but it soon converged. After that, the dollar yen has been rising along with the cross yen. The Bank of Japan has shown no stance to retreat by strengthening the current YCC. Apart from the evaluation that this is right or wrong, it is a fact that the difference in stance with other central banks is becoming clearer. The Bank of Japan is alone behind the normalization of finance. As the reaction of the exchange rate to risk alerts slows down, it seems that the observation of widening interest rate differentials will be re-recognized as a drive for yen selling.
The dollar-yen pair is likely to try high again. Today, we believe that the yen’s depreciation trend will continue.