Since the beginning of the year, the Japanese Yen has been strengthening notably after the period of weakness at the end of last year.
Last year USDJPY strength came on the back of the US Dollar rally as the Fed’s kicked off its policy tightening. However, this has been a negative factor for Japan. The Bank of Japan has been trying to keep the pressure on the Yen for a long time to fight deflation; it seems like the BoJ policy is not that effective.
At the beginning of the year the Yen was trading around 118.0, while on Friday, the pair closed the week around 111.0.
Inflation, growth and many economic activities are slowing down, not only in Japan but globally, which in return should keep the BoJ from thinking to exit the current easy policy anytime soon.
Declining Inflation
After suffering from Deflation in 2016, Japan’s inflation picked up in the end of 2016. In November of last year, Japan inflation posted the biggest monthly increase in more than two years.
Full report: https://www.orbex.com/blog/2017/05/will-boj-intervene-yen-keeps-rising/