Japan maintains gradual interest rate hikes, limiting yen support due to economic growth strategy.

Japan has not intervened to support the yen due to its gradual interest rate hike strategy, with the Bank of Japan aiming to support economic growth based on solid wage gains and sustainable inflation. The massive interest rate difference between the U.S. and Japan has contributed to the yen's decline, but as the Federal Reserve signals rate cuts and the Bank of Japan slowly raises rates, the 5% point spread between dollar and yen interest rates is expected to shrink, potentially helping the yen's depreciation. However, Japan's limited and gradual rate hikes may limit the yen's respite.

July 11, 2024
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