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27.01.2025, 14:23

USD/JPY plummets to near 154.00 as Yen strengthens across the board

  • USD/JPY dives sharply to near 154.00 as the Japanese Yen performs strongly on safe-haven demand.
  • The BoJ hikes interest rates by 25 bps but didn’t provide a specific interest rate hike path.
  • The US Dollar declines as Trump reverses the 25% tariff proposal on Columbia and an acceleration in Fed dovish bets.

The USD/JPY pair plunges to near 154.00 in Monday’s North American session. The asset weakens as the Japanese Yen (JPY) outperforms its major peers, with investors rushing to safe-haven fleet amid a sharp sell-off in United States (US) technology stocks.

Japanese Yen PRICE Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Australian Dollar.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   -0.23% -0.20% -1.03% 0.10% 0.38% 0.23% -0.75%
EUR 0.23%   0.11% -0.66% 0.48% 0.63% 0.59% -0.41%
GBP 0.20% -0.11%   -1.06% 0.38% 0.52% 0.50% -0.51%
JPY 1.03% 0.66% 1.06%   1.19% 1.61% 1.51% 0.43%
CAD -0.10% -0.48% -0.38% -1.19%   0.08% 0.12% -0.88%
AUD -0.38% -0.63% -0.52% -1.61% -0.08%   -0.00% -0.99%
NZD -0.23% -0.59% -0.50% -1.51% -0.12% 0.00%   -1.22%
CHF 0.75% 0.41% 0.51% -0.43% 0.88% 0.99% 1.22%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

US technology stocks plunged after analysts predicted that DeepSeek’s Artificial Intelligence (AI) model of China performs on par with top chatbots like OpenAI at affordable costs. Apart from the Japanese Yen, the Swiss Franc (CHF) is also performing strongly, being a safe-haven asset.

The Yen is also trading strongly on the back of an interest rate hike decision by the Bank of Japan (BoJ). The central bank raised its borrowing rates by 25 basis points (bps) to 0.5% on Friday amid confidence that sustained wage growth would keep inflationary pressures above the desired rate of 2%. The BoJ refrained from committing a pre-defined policy-restrictive path but said that they would raise interest rates further if the economy continued to perform in line with their expectations.

On early Monday, the US Dollar (USD) also performed strongly on multiple tailwinds such as US President Donald Trump’s threat to impose 25% tariffs on Columbia for refusing to accept military flights carrying illegal immigrants from their nation and the uncertainty ahead of Federal Reserve’s (Fed) monetary policy meeting on January 28-29, but surrenders its entire gains and resumed its downside journey towards the seven-week low.

Later, Trump dialed back his proposal of placing tariffs on Columbia as the South American nation accepted his terms, which diminished the USD’s safe haven. On the monetary policy front, an acceleration in Fed dovish bets also weighed on the US Dollar.

Traders now expect the Fed to cut interest rates by 50 bps this year, but it is widely anticipated to keep interest rates steady in the range of 4.25%-4.50% on Wednesday.

Japanese Yen FAQs

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

 

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