Japanese yen trades near 159.5 per dollar
The yen slipped to around 159.5 per dollar on Tuesday, erasing previous-session gains, amid fiscal concerns, persistent inflation pressures, and broad interest-rate differential dynamics versus the US.
The Japanese yen slipped to around 159.5 per dollar on Tuesday, erasing gains from the previous session amid mounting fiscal concerns and persistent inflationary pressures.
The Takaichi administration’s plan to cut the consumption tax on food to 1% for two years has fueled market concerns, as the government has yet to identify an alternative revenue source and the measure is viewed as an ineffective response to inflation that may not deliver lasting price stability.
Markets also remained concerned about elevated energy costs, which are weighing on Japan’s oil-dependent economy and currency.
Additionally, the yen continued to face pressure from wide interest rate differentials, as surging Japanese government bond yields were offset by a similar rise in US Treasury yields.
Meanwhile, traders are increasingly speculating on a Bank of Japan interest rate hike in September to support the yen and curb inflation.