The Japanese yen is witnessing marked volatility in financial markets, as the currency tries to recover from a four-month low against the US dollar. This significant decline has alarmed the Japanese authorities, who have issued new warnings of excessive currency fallout, warning that exceeding certain levels could lead to negative repercussions on the economy.
In this context, 160 yen per US dollar is considered a “red line” for the Japanese authorities, who may intervene to stop further decline if necessary. This victory could enhance global market volatility and increase challenges to Japan’s economic policies, raising the prospect of extraordinary measures to counter these circumstances.
In this context, speculation is increasing about the possibility of raising interest rates in Japan next December, especially in light of the global effects on the local currency.
On the other hand, the rise in the ten-year US Treasury yield has had a positive impact on the yen, as it coincided with the decline of the dollar against the yen by 0.4% to 154.02 yen, which is lower than the level of 154.62 yen that was at the beginning of today’s trading.
In addition, the Japanese yen recorded a significant loss of 2% against the dollar the previous day, its first loss in three consecutive days, and the largest daily loss since the beginning of October. This reflects the magnitude of the pressure on the Japanese currency.
In parallel, analysts suggest that the continued decline in US yields may give the yen a chance to recover, especially if the US Federal Reserve passes a new rate cut. However, questions remain about whether this temporary improvement will continue amid increasing domestic and global economic challenges.
Impact of Donald Trump’s victory on Japanese markets
Donald Trump’s victory in the US presidential election raises many questions about its impact on global financial markets, including Japanese markets. Since the beginning of his election campaign, Trump has taken positions that may directly affect the global economy, especially in aspects of trade and international economic relations.
While some may suggest that Trump’s victory may boost volatility in financial markets due to the unconventional economic policies he may pursue, there are those who believe that the impact will be limited.
Or temporarily. In particular, Trump’s victory could have a significant impact on the Japanese currency, the yen, which has suffered several pressures in the days following the election results.
Analysts believe that Trump’s victory could raise concerns about rising trade tensions between the United States and several countries, including Japan.
In the event of an escalation of these tensions or the imposition of new tariffs, it could negatively affect the Japanese economy and lead to a decline in the value of the yen.
Moreover, Trump’s hawkish fiscal policies in his attempts to achieve economic growth within the United States, such as tax cuts and increased government spending, could contribute to raising the US deficit and boosting inflation. This, in turn, could lead to interest rate hikes by the US Federal Reserve, putting pressure on other currencies such as the Japanese yen, which tends to fall when interest rates rise in the US economy.
On the other hand, Japanese markets may have experienced greater volatility after Trump’s victory due to uncertainty about his future policies. Although Trump has promised economic policies that could drive growth in the United States, the impact on the global economy may be less clear, creating instability among investors.
The impact of yen fluctuation on the Japanese economy
The volatility of the Japanese yen is an ongoing challenge to the Japanese economy, directly affecting businesses and consumers at home and on trade relations with international partners. The yen is a safe currency in global financial markets, benefiting from capital flows in times of economic uncertainty, but at the same time it can suffer from sharp fluctuations as a result of changes in global monetary policy or market developments.
In this context, the fluctuations of the yen affect various aspects of the economy Japanese, from trade to overall economic growth. When the yen weakens against other currencies, especially the US dollar, it can have a positive impact on Japanese exports.
A weaker currency enhances the ability of Japanese companies to export goods at more competitive prices, contributing to increased revenues from global markets.
On the other hand, when the yen appreciates, Japan’s export costs can increase, reducing its competitiveness in international markets. On the other hand, a strong yen reduces the cost of importing goods, which can boost the local economy by reducing production costs for Japanese factories that rely on imported raw materials.
This positively affects Japanese companies that rely on imports for their industrial needs. Domestically, yen volatility also affects domestic prices and inflation. If the yen is weak, the cost of imported goods increases, which contributes to the increase in the prices of local products and puts pressure on Japanese households through the higher cost of living.
On the other hand, strong yen volatility may lead to stock price fluctuations, as Japanese stock markets can be significantly affected by currency fluctuations due to the association of many Japanese companies with the global economy.
