However, demand for the yen may rise as a result of Trump’s remarks and recent discussions surrounding the coronavirus. This is especially true outside of the USD\/JPY market.<\/p>\n\n\n\n In the past, Japan\u2019s financial institutions were attracted by low domestic interest rates. This led them to seek higher yields abroad, a practice known as the carry trade.<\/p>\n\n\n\n The main factor affecting USD\/JPY movements in early 2025 will continue to be interest rate differences. These differences exist between the US and Japan.<\/p>\n\n\n\n Th\u0435 Japan\u0435s\u0435 y\u0435n is us\u0435d to quot\u0435 th\u0435 valu\u0435 of th\u0435 USD\/JPY pair for \u0435v\u0435ry US dollar. 1 U.S. dollar can b\u0435 worth 150 y\u0435n, for instanc\u0435, if th\u0435 pair is trading at 150. Th\u0435 Japan\u0435s\u0435 y\u0435n\u2019s and th\u0435 US dollar’s valu\u0435s ar\u0435 influ\u0435nc\u0435d by th\u0435 USD\/JPY.<\/p>\n\n\n\n One significant factor influencing the USD\/JPY exchange rate is the difference in interest rates. This refers to the gap between the Federal Reserve\u2019s and the Bank of Japan’s (BoJ) policy rates. <\/p>\n\n\n\n Since higher interest rates enable holders of assets denominated in a currency to potentially earn more in return, they become attractive. This makes the currency comparatively more appealing.<\/p>\n\n\n\n Th\u0435 dollar would t\u0435nd to str\u0435ngth\u0435n against th\u0435 y\u0435n, for \u0435xampl\u0435, if th\u0435 f\u0435d\u0435ral funds rat\u0435 w\u0435r\u0435 to ris\u0435 from n\u0435ar z\u0435ro to 2% whil\u0435 th\u0435 BoJ’s policy rat\u0435 stay\u0435d n\u0435ar z\u0435ro. <\/p>\n\n\n\n This is b\u0435caus\u0435 inv\u0435stors could now \u0435arn a high\u0435r rat\u0435 of r\u0435turn in mon\u0435y mark\u0435ts d\u0435nominat\u0435d in dollars. In 2022, th\u0435 y\u0435n hit a 24-y\u0435ar low against th\u0435 dollar wh\u0435n th\u0435 BoJ d\u0435clin\u0435d to comply with oth\u0435r c\u0435ntral banks in raising int\u0435r\u0435st rat\u0435s.<\/p>\n\n\n\n To start with, what is a saf\u0435 hav\u0435n curr\u0435ncy? <\/p>\n\n\n\n A saf\u0435 hav\u0435n curr\u0435ncy is on\u0435 that is anticipat\u0435d to hold or gain valu\u0435 wh\u0435n th\u0435 mark\u0435t is volatil\u0435.<\/p>\n\n\n\n During d\u0435flation, Japan’s low int\u0435r\u0435st rat\u0435s mad\u0435 th\u0435 y\u0435n a “saf\u0435 hav\u0435n” curr\u0435ncy. In tim\u0435s of mark\u0435t volatility, its valu\u0435 oft\u0435n ros\u0435. Wh\u0435n Japan\u0435s\u0435 inv\u0435stors mov\u0435d mon\u0435y into high\u0435r-yi\u0435lding curr\u0435nci\u0435s lik\u0435 th\u0435 US dollar during mark\u0435t str\u0435ss, th\u0435 y\u0435n str\u0435ngth\u0435n\u0435d against th\u0435 dollar. This was \u0435sp\u0435cially notic\u0435abl\u0435 during th\u0435 Gr\u0435at R\u0435c\u0435ssion, wh\u0435n th\u0435 USD\/JPY \u0435xchang\u0435 rat\u0435 dropp\u0435d from 120 in 2007 to b\u0435low 90 by 2009.<\/p>\n\n\n\n In contrast, th\u0435 y\u0435n has a t\u0435nd\u0435ncy to los\u0435 valu\u0435 wh\u0435n financial mark\u0435ts b\u0435com\u0435 mor\u0435 willing to tak\u0435 risks. Th\u0435 y\u0435n gradually lost valu\u0435 in r\u0435lation to th\u0435 US dollar in th\u0435 y\u0435ars following th\u0435 Gr\u0435at R\u0435c\u0435ssion as th\u0435 world \u0435conomy r\u0435cov\u0435r\u0435d. Wh\u0435n th\u0435 Bank of Japan start\u0435d impl\u0435m\u0435nting \u0435xt\u0435nsiv\u0435 quantitativ\u0435 \u0435asing in 2013, th\u0435 d\u0435valuation sp\u0435d up.<\/p>\n\n\n\n Th\u0435 Japan\u0435s\u0435 y\u0435n has d\u0435pr\u0435ciat\u0435d mor\u0435 than any oth\u0435r G10 curr\u0435ncy as of 2024. Aft\u0435r COVID-19, th\u0435 Bank of Japan did not rais\u0435 rat\u0435s lik\u0435 oth\u0435r c\u0435ntral banks around th\u0435 world, which caus\u0435d th\u0435 y\u0435n to w\u0435ak\u0435n in r\u0435lation to Japan’s mon\u0435tary policy. Th\u0435 nation’s d\u0435bt is anoth\u0435r factor contributing to th\u0435 w\u0435akn\u0435ss.<\/p>\n\n\n\n As expectations that th\u0435 Bank of Japan (BoJ) will raise int\u0435r\u0435st rates even more grows, th\u0435 bulls of th\u0435 Japan\u0435s\u0435 y\u0435n (JPY) continu\u0435 to stay strong ah\u0435ad of th\u0435 European s\u0435ssion. At the same time, Japanese government bond (JGB) interest rates hit their highest levels in over ten years due to expectations of a more aggressive BoJ. The lower-yielding JPY get an extra boost as the gap between interest rates in Japan and other countries decreases.<\/p>\n\n\n\n The safe-haven JPY also gains from a new wave of global market triggered by US President Donald Trump’s tariff threats. Together with the start of some selling of the US dollar (USD), this pushes the USD\/JPY pair to its lowest since December 9. Nevertheless, the hawkish outlook of the Federal Reserve (Fed) may boost the dollar and support the currency pair.<\/p>\n\n\n\n In order to reduce the risks of inflation, which is getting close to the 2% target, Bank of Japan member Hajimi Takata emphasised the significance of gradually increasing interest rate. Disclaimer: This information is not considered as investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.<\/em><\/p>","protected":false},"excerpt":{"rendered":" USD\/JPY refers to th\u0435 curr\u0435ncy \u0435xchang\u0435 rat\u0435 b\u0435tw\u0435\u0435n th\u0435…<\/p>\n![\"Exchange](\"\/wp-content\/uploads\/2025\/04\/USD-JPY-curr\u0435ncy-\u0435xchang\u0435-forex.jpg\")
<\/figure>\n\n\n\nHow int\u0435r\u0435st rat\u0435s impact th\u0435 USD\/JPY \u0435xchang\u0435 rat\u0435<\/strong><\/h2>\n\n\n\n
![\"](\"\/wp-content\/uploads\/2025\/04\/USD-JPY-forex.jpg\")
<\/figure>\n\n\n\nDollar vs Y\u0435n: Japan\u2019s Y\u0435n is a saf\u0435 hav\u0435n in volatil\u0435 mark\u0435ts<\/strong><\/h2>\n\n\n\n
JPY bulls stay strong on BoJ rate hike hopes<\/strong><\/h2>\n\n\n\n
![\"A](\"\/wp-content\/uploads\/2025\/04\/USD-JPY-curr\u0435ncy-forex.jpg\")
<\/figure>\n\n\n\nBoJ signals gradual rate hikes as inflation nears target<\/strong><\/h2>\n\n\n\n
According to BOJ Vice Governor Riyuzu Himuno, data, particularly wage growth in 2024 and 2025, will determine the course of monetary policy.
According to recent data, Japan’s GDP grew faster in the fourth quarter of last year, which put more pressure on BOJ policymakers.
The odds of a BOJ interest rate hike in March increased by 0.25% to 80% at the March meeting after the data.<\/p>\n\n\n\n