JPY is set for appreciation – NBC
02.08.2024, 15:51

JPY is set for appreciation – NBC

The Japanese Yen (JPY) started the month of July at the weakest levels seen in over 30 years (162 to the US Dollar (USD)). From there the island-nation currency has surged more than 9%, settling below 148 per USD, NBC FX analysts Stéfane Marion and Kyle Dahms note.

The potential for JPY strength later this year

“The factors underpinning the current bout of strength were twofold, firstly the unwinding of carry trades brought an initial surge which was then compounded by a surprise decision from the Bank of Japan to raise rates to their highest level in 15 years. In addition, the central bank showed a path towards slowing asset purchases, a sizeable shift in stance from previously easy money.”

“With inflation still above target, the contrast in the conduct of monetary policy between Japan and the rest of the world should become more apparent especially if the Federal Reserve (Fed) starts easing in September.”

“The events of July have confirmed our view that the JPY was set for appreciation. We continue to see the potential for JPY strength later this year, but it should be said that a lot of ground has already been covered in little time.”

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