The exchange rate of yen in 24 made a dramatic U-turn, and the yen appreciated for the first time in 4 years due to a reversal in monetary policy

・The Bank of Japan is considering a policy change, which is different from 2023 when the yen did not appreciate

・Interest rates are likely to rise in Japan and interest rates will fall in the US

　・Observations that the Bank of Japan will decide to lift the negative interest rate policy at policy meetings on the 18th and 19th of this month have increased, and the yen has risen close to 4% in just 1 day. After that, after falling for 2 consecutive days, the yen appreciated again.

　・The Bank of Japan policy meeting in January and March will be an event that will further strengthen speculation for the April meeting, where many Bank of Japan watchers see that policy changes are most likely. The inflation rate has been above the Bank of Japan's target of 2% for over a year and a half, but the Bank of Japan is trying to obtain further confirmation of steady wage growth, and there is a possibility that this will be shown in next year's Spring Battle.

　・ “Long-term structural improvements in the Japanese economy have progressed sufficiently.” Steven Barrow, who is responsible for G10 strategy at Standard Bank, proposed positive changes such as overcoming deflation and rising stock markets, and predicts that the appreciation of the yen will progress over the long term regardless of whether interest rate differences have been reduced. The exchange rate of yen one year from now is expected to be 1 dollar = 125 yen. The TSE stock price index (TOPIX) has risen more than 20% since the beginning of the year.

　・According to data from the U.S. Commodity Futures Trading Commission (CFTC) up to December 5, asset managers have reduced their bearish positions in yen in recent months. Meanwhile, hedge funds are still skeptical about yen and maintain a high level of selling positions.

・ “Since the probability that interest rate cuts will begin in June next year or before next June has increased, it is expected that the appreciation of the yen and depreciation of the dollar will progress. If the US economy goes into recession, there is a possibility that the dollar and yen will depreciate one step towards 130 to 135 yen, while if a soft landing is successful, around 140 yen could be an opportunity for the dollar to swell.”

・ “If we look at interest rate cuts by overseas central banks and changes in the Bank of Japan's monetary policy, the dollar and yen will definitely be in a downward direction. However, it's hard to think of an appreciation of the yen, such as 100 yen, like in the old days. The economic recovery doesn't feel as strong as it used to be.”

・ “There is a possibility that the Bank of Japan will not be able to tighten against the backdrop of US interest rate cuts, but the dollar and yen will fall just by reducing the Japan-US interest rate difference due to factors of falling US interest rates.”

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