The yen is facing new losses after the slid of Japanese economy
The Japanese yen witnessed a decline on Friday against a basket of global currencies, with the resumption of its losses that stopped for two days against the US dollar, and it is close to incurring a third weekly loss in a row due to the Japanese economy unexpectedly sliding into an economic recession at the end of last year.
The yen fell against the dollar by 0.3% today after it had recorded a rise yesterday, Thursday, by 0.4%, which was considered the second daily gain within the recovery processes, which were also from low levels until it rose for two days after verbal intervention from officials in Japan to support the local currency from Excessive weakness. Which was represented by the statements of Japan's chief currency diplomat, Masato Kanda, who said on Wednesday that the Japanese authorities are monitoring the movements of the foreign exchange market with great sensitivity, and will take the necessary measures to support the local currency if necessary.
This recession raises doubts about the possibility of the Bank of Japan exiting its loose interest rate policy early this year, which will impose significant pressure on the Japanese yen exchange rate, in conjunction with the pressure of rising yields on Friday by more than 0.5 percentage points, with the resumption of gains that were halted for two sessions, which enhances investment opportunities in the US dollar.
Data issued yesterday, Thursday in Tokyo, showed that the Japanese economy stagnated at a rate of 0.1% in the fourth quarter of 2023, worse than market estimates of growth at a rate of 0.2%, and the economy recorded a contraction at a rate of 0.7% in the third quarter, as these data show that the third largest economy in the world still needs to continue the very easy stimulus monetary policy tools for the longest period this year, which reduces the possibility of the Bank of Japan exiting the range of loose interest rates early this year.
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