JPY faces the threat of devaluation. Overview for 13.10.2023

The Japanese yen paired with the US dollar is steadily weakening. The current USDJPY exchange rate stands at 149.71.

The US dollar is once again approaching the crucial psychological threshold for the market at the level of 150 yen, driven by yesterday's release of US inflation statistics. The gap between Japanese and US government bond yields has widened following the market's examination of the figures.

With USD hovering around 150.00 yen, the issue of intervention is arising again. Last time, it remained unclear whether financial interventions were conducted to support JPY. It has been just over a week since the dollar went from 150.00 to 147.43 yen on 3 October. Now, the yen is weakening once more, and the question of intervention remains open.

There is significant doubt that one-off interventions can effectively stabilise the yen. The market is extremely interested in government bond yields based on interest rate differentials. Without a substantial change in the Bank of Japan's monetary policy, this volatility will persist.

Given these factors, it is possible that the yen will continue to depreciate.