JPY took a pause. Overview for 14.02.2023

The US dollar in the pair with the Japanese yen found a foothold. The current quote is 132.00.

The wave of growth that started in the USD some time ago made the yen go down. Moreover, the market argument that the US Federal Reserve System would go on lifting the interest rate also pressed down on the yen due to the difference in the rates.

The morning statistics demonstrated that the Japanese GDP in Q4 2022 grew by 0.2% q/q and 0.6% y/y. Both increases turned out weaker than forecast.

The Japanese economy has trouble recovering for two reasons minimum. The first one is the weakness of the domestic demand, while the second one is the decline in export due to persistent supply chains problems. If household expenses do not grow, any actions of the Bank of Japan towards inflation stimulation will be making almost no sense.

As for the export situation, it is not the problem of just Japan. The British economy, for example, is living through the same trouble.

It looks like the Japanese economy is developing two parallel scenarios at a time. On the one hand, the BoJ is fighting as if for its life with the prices and sometimes even wins. On the other hand, households go on living like they are used to and show no reaction to inflation or negative interest rates. Anyway, while the Japanese interest rate remains at -0.1% a year, the JPY will remain vulnerable.