Yen (JPY) strengthened against the dollar (USD) and Bitcoin
After US Finance Minister Scott Bessent said Bank of Japan is behind the curve for inflation and will probably have to raise interest rates.
“The Japanese have an inflation problem … They are behind the basket, so they will wander and they have to get their inflation problem under control,” Bessent said during an interview with Bloomberg TV.
Bessents take contrasts with Boj Governor Kazuo Ueda, who has justified moving slowly on rate increases because the underlying inflation that focuses on the strength of domestic demand and wages remains short than the central bank’s 2% target, even if the headline is over 3%. In July, the bank kept its benchmark interest rate stable at 0.5% and gave no clues to future movements.
The Trump administration has for several months called for a tighter monetary policy in Japan to stop yens depreciation and narrow the speed difference between the two currencies. In a report published in June, the Treasury called BOJ to focus on growth, inflation and normalization of Yen’s weakness against the dollar as part of a structural rebalans of bilateral trade, according to the Financial Times.
Bessent’s comments strengthened yen higher everywhere. Bitflyer -listed BTC/JPY -Pair dropped 1.7% to 17,845,432 yen, where they put greater loss than Coinbases BTC/USD pair that fell to $ 121,650. Dollar-yen-couple (USD/JPY) Glide for the third straight day and hit a three -week low of 146.21, according to data source trading.
Risk-off front?
Dealers have historically used Yen as a carrier to finance the purchase of assets in high -performance economies. That is, they have utilized Japan’s low interest rate to borrow yen and buy assets that provide a higher return that benefits from the difference. As such, events in Yen often trigger fear of risk aversion in the financial markets.
This may not be the case anymore, according to Marc Chandler, Chief Market strategist at Bannockburn Global Forex.
Risk-off is often the result of the settlement of financing actions, e.g. Short Yen, Long Brazilian Real (Brl). However, yen may not be the most attractive financing currency at this time.
“Not only is the Swiss political rate of zero, but JPY volatility is higher,” Chandler told Coindesk in an E email.
