Strategists Rethink Yen Exchange Rate Following Interest Rate Increase in Japan

Currency experts have fundamentally revised their forecasts for the yen exchange rate after the Bank of Japan raised interest rates in July and the US Federal Reserve recently signaled upcoming rate cuts. Prior to the Bank of Japan's decision on July 31, many strategists predicted a further weakening of the already struggling yen, which had lost about 12 percent against the dollar in the first half of the year. Experts from Bank of America, ATFX Global Markets, and the Royal Bank of Canada warned as recently as June that a market intervention by Japan might not stop the decline. In such scenarios, the yen was even vulnerable to a further drop beyond the 160 yen per US dollar mark. The recent developments have now upended these assessments. As the world continues to pay attention to the decisions of central banks, the outlook for the Japanese currency seems to be noticeably changing.