Japan’s MoF goes MIA as the yen continues to weaken

The US dollar is ending the week a touch softer against most currencies despite another set of hotter-than-expected US inflation figures. But the main story in currency markets this week is the ongoing drop in the Japanese yen, which hit a new low for the year after policymakers at both the BoJ and Ministry of Finance (MoF) again refrained from stepping in to support the currency with concrete action. With US data providing limited hope of a turnaround in interest rate expectations there in the near term, pressure on the yen (and other currencies in Asia) may well mount further. That said, our base case remains that the yen will eventually rebound as the monetary policy cycle turns towards easing in the US, and we are sticking to our end-2024 forecast for USD/JPY at 145.