Japanese Yen: Policy shifts weigh on JPY against US Dollar – Rabobank
Rabobank's Senior Macro Strategist Bas van Geffen discusses renewed Japanese Yen (JPY) weakness following recent joint US-Japan FX intervention that briefly pushed USD/JPY below 156.
Senior Macro Strategist Bas van Geffen from Rabobank discusses the recent weakness of the Japanese Yen (JPY) following the US-Japan FX intervention. This intervention briefly pushed USD/JPY below 156. Japan is set to implement a food sales tax cut and provide household handouts, but these measures do not address structural growth issues.
The tax cut will cost JPY 4 trillion annually, without a clear funding source. The government and Finance Minister Katayama have pledged not to finance the tax cut through increased deficits. Despite the opposition and concerns from within the ruling LDP party, the market has not shown significant reaction, indicating the real test may be the currency.
The yen has been gradually depreciating over the past few days after the joint US-Japan intervention, and the FX market is awaiting signs of new interventions or structural support. However, these tax cuts do not directly lead to investments that could improve Japan's economic growth, which would provide the necessary support for the Yen.
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