Nothing can prevent the Yen from devaluating. Overview for 09.06.2022

After hitting a new 20-year low, USDJPY stopped.

The Japanese Yen got even weaker against the USD. The current quote for the instrument is 133.82.

A new high in USDJPY is at 134.56 – the asset continues to devalue. The process started on 27 May and the Yen has dropped 5.85% since that time. As for 2022, the Japanese currency has already lost 16.5%.

The rally in US bond yield supports the “greenback”, which puts additional pressure on the Yen. Market rumour has it that the bond yield had to be contained to help the Yen to correct because all other factors are against the Japanese currency. 

The Bank of Japan sticks to the “soft” monetary policy, thus making the Yen more vulnerable in the currency market because the “greenback” gets a lot of support from the US Fed’s aggressive stance. 

In addition, there are serious doubts that current monetary policy, slow wage indexation, and low CPI and Household Spending growth rates might help inflation reach the target level of 2%. Even if it does, there is no guarantee that the BoJ will be able to hold it there. In this light, risks in USDJPY remain very high.

Moreover, demand for the Yen as a “safe haven” asset, which has always supported the Japanese currency, is extremely low this year.