Japan’s National CPI climbs 3.0% YoY in August, Core CPI rises as expected
19.09.2024, 23:32

Japan’s National CPI climbs 3.0% YoY in August, Core CPI rises as expected

Japan’s National Consumer Price Index (CPI) climbed 3.0% YoY in August, compared to the previous reading of 2.8%, according to the latest data released by the Japan Statistics Bureau on Friday,

Further details unveil that the National CPI ex Fresh food arrived at 2.8% YoY in August versus 2.7% prior. The figure was in line with the market consensus of 2.8%. 

CPI ex Fresh Food, Energy increased 2.0% YoY in August, compared to the previous reading of 1.9% rise.

Market reaction to Japan’s National CPI data

Following the Japan’s CPI inflation data, the USD/JPY pair is up 0.08% on the day at 142.72. 

Japanese Yen FAQs

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.

The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

 

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