Yen Sees Largest Decline in a Month Against Dollar

Japanese Officials’ Comments Dampen Expectations of Policy Shift

The yen experienced its most substantial daily decline against the dollar in a month on Tuesday, following remarks from Japanese officials that tempered expectations of an imminent shift in monetary policy by the Bank of Japan (BOJ).

Dollar Stable Ahead of US Inflation Data

Meanwhile, the dollar maintained a stable stance as investors awaited crucial US inflation data, which could offer insights into the Federal Reserve’s potential timing for initiating its interest rate cutting cycle this year.

Yen’s Movement and Official Comments

In recent trading, the yen depreciated by 0.4 percent against the dollar, reaching 147.47 per dollar, and demonstrated a similar decline against the British pound. These movements followed statements from BOJ Governor Kazuo Ueda, who adopted a somewhat less optimistic outlook on Japan’s economy compared to January. Additionally, Finance Minister Shunichi Suzuki emphasized that Japan has yet to declare overcoming deflation.

Euro and Sterling

The euro retraced from its near two-month high reached last week, trading at $1.0936 in recent transactions. Sterling saw a modest increase of 0.04 percent to $1.2816, stepping back slightly from its over seven-month peak attained on Friday.

Other Currencies and Dollar Index

Currencies apart from the yen demonstrated minimal movements, with the dollar stabilizing before the release of US inflation data. The Australian dollar fell by 0.04 percent to $0.6612, while the New Zealand dollar declined by 0.02 percent to $0.6169. The dollar index experienced a marginal increase of 0.04 percent, reaching 102.83 after hitting a nearly two-month low last week.

Outlook

As the market awaits the release of US inflation data, the yen’s decline against the dollar underscores the impact of official statements on currency movements. The stability of the dollar reflects the cautious approach of investors ahead of crucial economic indicators, which are expected to provide clarity on monetary policy decisions in both the US and Japan.