The Japanese Yen is under pressure against the US Dollar on Wednesday, with the exchange rate trading near nine-month highs at approximately 154.64, despite a generally weaker Greenback. The Yen is facing challenges as a result of Japan’s expansionary fiscal policy and the Bank of Japan’s cautious strategy regarding the normalization of monetary policy, both of which are adversely affecting the currency. The Japanese Yen remains under pressure even with a declining US Dollar, as USD/JPY hovers near nine-month peaks. PM Takaichi highlights commitment to financial assistance as Japan strives to uphold its fragile recovery. Focus in the US is currently on the House vote intended to end the ongoing government shutdown, as well as the rising chances of a Federal Reserve rate cut in December.
During the recent gathering of the Council on Economic and Fiscal Policy on Wednesday, Prime Minister Sanae Takaichi reiterated her commitment to strengthening Japan’s fragile recovery through a comprehensive fiscal approach. Private sector members have urged the government to develop a supplementary budget exceeding ¥14 trillion, arguing that heightened spending is essential to address declining domestic demand and stagnant wage growth. Takaichi called on Bank of Japan Governor Kazuo Ueda to provide regular policy updates to the council. She highlighted that Japan has not completely overcome deflation, warning that “with misguided policies, there is a danger Japan could regress,” which would adversely affect consumption and investment.
Meanwhile, Japanese officials voiced continued worry about the Yen’s persistent weakness, though they did not suggest any immediate actions. Finance Minister Satsuki Katayama emphasized that the government is closely monitoring foreign exchange movements “with a high sense of urgency,” especially concerning any disorderly or speculative fluctuations. In the United States, attention is focused on the House of Representatives as they gear up for a vote later on Wednesday intended to bring an end to the unprecedented government shutdown.
While progress in reopening the government and restoring federal operations briefly strengthened the Greenback, this boost was short-lived, as the Dollar weakened again with rising trader expectations of another Federal Reserve rate cut in December. Reports indicates that 84 out of 105 economists expect the Fed to lower the federal funds rate by 25 basis points, resulting in a range of 3.50%-3.75% during its meeting on December 10.