Yen Rallies on Haven Buying, Strong Inflation
The Japanese yen strengthened toward 156 per dollar on Friday, reaching its highest level in five weeks as a global selloff in technology and artificial intelligence stocks boosted demand for safe-haven assets. The equity downturn intensified this week after Meta Platforms’ plans to increase capital expenditure reignited concerns that technology companies may take on more debt to fund the AI buildout. In Japan, data showed that both headline and core inflation rose 2.1% year-on-year in September, marking their highest levels in nine months as yen weakness and elevated energy prices drove up import costs. With underlying inflation returning above the Bank of Japan’s 2% target, market expectations for another interest rate hike this year have strengthened. The BOJ is widely anticipated to leave rates unchanged at its upcoming meeting, potentially paving the way for a rate increase in December.
The Japanese yen strengthened toward 156 per dollar on Friday, reaching its highest level in five weeks as a global selloff in technology and artificial intelligence stocks boosted demand for safe-haven assets. The equity downturn intensified this week after Meta Platforms’ plans to increase capital expenditure reignited concerns that technology companies may take on more debt to fund the AI buildout. In Japan, data showed that both headline and core inflation rose 2.1% year-on-year in September, marking their highest levels in nine months as yen weakness and elevated energy prices drove up import costs.
With underlying inflation returning above the Bank of Japan’s 2% target, market expectations for another interest rate hike this year have strengthened. The BOJ is widely anticipated to leave rates unchanged at its upcoming meeting, potentially paving the way for a rate increase in December.