Yen rebounded because Japan was able to stop negative interest rates

Japan's local currency this morning strengthened against the USD, after officials in this country mentioned the possibility of ending the negative interest rate policy.

On the morning of September 11, the yen sometimes increased nearly 0.8% against the USD, to 146.6 yen per US dollar. Japan's domestic currency strengthened thanks to comments last weekend by Bank of Japan (BOJ) Governor Kazuo Ueda. Accordingly, this agency can end the negative interest rate policy if they see that the 2% inflation target is about to be achieved.

In an interview in Yomiuri newspaper , Ueda said that between now and the end of the year, the BOJ may have enough data to evaluate whether or not it will end negative interest rates.

"Ueda is laying the groundwork for moving away from negative interest rates. He's making a lot of announcements," said Matt Simpson, senior market analyst at City Index.

Governor of the Bank of Japan Kazuo Ueda. Photo: Bloomberg

In the past few months, the yen has been under pressure against the USD when the interest rate policies of the US and Japan are opposite. While the US continuously raises interest rates to curb inflation, Japan still maintains negative interest rates . This causes investors to sell yen to switch to other channels for higher profits.

"We forecast that the negative interest rate policy will end in the first quarter of 2024. Ueda may be starting to encourage the market to follow this scenario," said Takeshi Ishida, currency strategist at Resona Bank. review.

However, with US government bond yields still above 4%, Ishida believes that the yen's trend will be very difficult to reverse just with speculation about the possibility of policy changes.

This morning, the greenback lost value against many other currencies. Last week, this currency also reached a 3-month peak compared to the euro and pound.

The Euro is currently up 0.13% against the USD, up to 1 euro for 1.07 US dollars. The pound also increased by 0.16% to 1 pound for 1.24 US dollars.

Dollar Index - measuring the strength of the greenback against a basket of major world currencies - is currently only 104.8 points. Last week, the index recorded its 8th consecutive weekly increase - the longest since 2014.