Japanese Yen: Slightly weaker bias as fiscal risks grow – DBS
DBS Group Research economist Chang Wei Liang notes that the Japanese Yen (JPY) could trade slightly weaker as the government reportedly considers a second supplementary budget, with USD/JPY around mid-158.
DBS Group Research economist Chang Wei Liang suggests the Japanese Yen (JPY) may trade slightly weaker as the government contemplates a second supplementary budget. USD/JPY is currently hovering around mid-158 levels. Market uncertainty over the supplementary budget, including a proposed consumption tax cut for food in April 2027 costing JPY5 trillion annually, could prompt investors to worry about increased fiscal spending at a time of rising yields.
The Bank of Japan (BoJ) should stay vigilant for any increase in inflation expectations, potentially adopting a more hawkish stance if the supplementary budget is deemed inflationary.
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