Standard Chartered analysts suggest that the recent Japanese Yen (JPY) weakening following the Bank of Japan’s (BoJ) rate hike could further motivate the central bank to consider additional rate hikes.
They emphasize that the BoJ might find assurance in the movements of the JPY. However, they highlight the complexity of the JPY’s weakness.
On the one hand, the current weakness of the JPY has contributed significantly to Japan’s export growth and the performance of its equity market. Yet, on the other hand, it has also intensified imported price pressures, posing challenges to consumers’ purchasing power.
To address these challenges and stabilize import prices, the BoJ may lean towards tightening its policy in the future. This decision could be influenced by various factors, including balancing exchange rates and safeguarding consumers’ financial well-being.