JPY: what a surge! Overview for 08.12.2023

The Japanese yen is strengthening its position against the US dollar. The current USDJPY exchange rate stands at 143.64.

When we mentioned a couple of days ago that the yen was on the brink of significant movements, we could not have imagined that the Japanese national currency would rise so quickly and sharply. However, the market anticipated something of this nature.

So, the JPY exchange rate has surged overnight to the peak of 8 August 2023. What happened?

Bank of Japan Governor Kazuo Ueda mentioned yesterday that the regulator's policy would become even more complex at the end of this year and undergo a transformation the following year. The monetary policymaker outlined several options for future developments. Earlier, Ueda’s deputy commented on how the end of the ultra-soft credit and monetary policy could potentially influence the economy.

These statements ignited a real fire in the yen. It experienced the most substantial daily increase since January, and the yields on Japanese five-year treasury securities saw their most significant sell-off in a decade.

Just four weeks ago, the yen was hovering near 30-year lows, while the dollar was rapidly climbing towards 150.00. The markets were teetering on the brink of the CB’s intervention meant to support the currency – but the JPY was remarkably lucky, and circumstances changed.