The Yen is slowly reaching stability. Overview for 26.04.2022

USDJPY is slowly moving away from the multi-year highs.

The Japanese Yen is trying to reach stability against the USD after plummeting to its 20-year lows. The current quote for the instrument is 127.85.

The Yen devaluation attracted a lot of attention and it seems like market players finally decided that it was too much. At the same time, there is a feeling that the plunge in the Japanese currency is far from being over. 

According to the International Monetary Fund, the Bank of Japan may continue its accommodation monetary policy because there was no inflation upsurge in the country. Sure, it grew but not too much, unlike many other economies. 

At the same time, the International Monetary Fund believes that Asia, on the whole, may face stagflation, the situation in which the inflation rate is high, the economic growth rate slows. In most cases, local regulators will have to decide on tightening their monetary policies and the pace of this tightening will directly depend on estimations of outside pressure and domestic inflation. In Japan, in particular, inflation estimations are looking weak and it helps the BoJ to keep its monetary policy soft. 

For Japan and its weak national currency, the import is becoming more expensive but the companies that export their products benefit from this situation. As a result, there is some kind of balance, which is quite good. 

Demand for the Yen as a “safe haven” asset is still rather low, so the current fluctuations may be considered a technical pause.