Japan’s Tokyo CPI inflation rises to 3.5% YoY in April

Japanese Yen (JPY) is one of the most traded currencies in the world. Its value is widely determined by the Japanese economic performance, but more specifically in the Bank of Japan policy, the difference between Japanese and US bond yields, or at risk of entrepreneurs, among other factors.

One of the Bank of Japan's mandates is money control, so its motions are key for yen. The BOJ directly intervenes in the currency markets sometimes, generally lowering the cost of the yen, though it is not prevented from doing so often because of political concerns of major trading partners. The BoJ Ultra-Lose financial policy between 2013 and 2024 has caused the yen to remove the major currency due to an increase in policy variation between Bank of Japan and other major banks. Most recently, the gradual disobedience to this ultra-loose policy has provided some yen support.

In the past decade, the BOJ's stance that clings to ultra-loose financial policy has led to an expansion of policy variation on other central banks, especially in the US Federal Reserve. It supports an expansion of diversity between the 10-year US and Japanese bond, favored the US dollar against the Japanese Yen. The BOJ's decision in 2024 to gradually renounce the ultra-loose policy, in conjunction with reductions in interest rates on other major central banks, narrowed the diversity.

Japanese Yen is often seen as a safe investment. This means that in times of stress on the market, investors are more likely to put their money on Japanese money because of the supposed reliability and stability. The chaotic times are likely to strengthen the amount of yen against other currencies that are seen as more risk to invest.