Analyst: Bank of Japan Unwilling to Raise Rates Quickly, Yen Still Has No Breathing Space

On June 25th, Jin Shi data analyst Ven Ram said that the yen may not have a chance to catch its breath as the Bank of Japan is still unwilling to raise interest rates. Since the end of March, the USD/JPY has strengthened by more than 5%. However, unlike history, this quarter's performance is not solely supported by the US dollar. Japan's real interest rate is becoming lower and lower, while the interest rate in the United States remains high, which has always been the core reason for the weak yen. The change in the yen reflects the current situation of the Japanese economy: the policy interest rate is becoming increasingly inadequate compared to inflation, and the Bank of Japan is the key to resolving this deadlock. However, central bank officials have not shown any signs of urgency to combat inflation. The lack of urgency means that Japan's real interest rate will not improve in the short term, making the yen more vulnerable. As for the US dollar, the real interest rate is still hovering at a high level, with almost no signs that the last mile of inflation resistance will be completed in the short term. The dynamics of these two aspects mean that the yen will continue to be on the defensive in the end of this quarter and beyond.