#数字资产市场动态 The Japanese Yen hits a new low, and the central bank may need to accelerate action

The yen against the US dollar has fallen to 158.55, approaching its lowest point in decades. As the yen continues to depreciate, market speculation is growing that the Bank of Japan might need to speed up its rate hikes.

The issue at hand is straightforward: a weaker yen increases import costs, which companies pass on to consumers, leading to rising prices. Central bank officials have recently mentioned this point frequently, clearly noticing the spillover effects of exchange rate fluctuations on domestic inflation. If inflation expectations start to loosen, the existing policy plans will need to be adjusted.

According to general market expectations, the next rate hike could occur this summer. But judging by officials' attitudes, they are reluctant to wait passively. If the yen continues to weaken, the scheduled semiannual rate hikes might be disrupted, with an increased likelihood of preemptive action. The policy meeting on the 23rd is expected to keep interest rates at 0.75%, a thirty-year high, but the committee will monitor until the last moment, focusing on assessing the impact of exchange rate changes on household and business inflation expectations.

There is a delicate balance here. Yen depreciation can boost exports and stimulate the economy, but the cost is higher import prices. This trade-off was manageable before, but now the yen has depreciated too far. Yoshinobu Tsutsui, President of the Japan Business Federation, made a rare public statement this week, directly calling on the government to intervene, saying the yen's decline has become "a bit overdone." This reflects the anxiety within the business community.

The central bank just raised its benchmark interest rate last month, but the yen remains weak. Influenced by domestic political factors, the yen slid to an 18-month low this week. According to Bloomberg data, over the past two years, the yen has fluctuated roughly between 140 and 161.95. Although the monetary authorities have strengthened verbal warnings, causing the yen to rebound slightly from its lows, overall depreciation pressures persist, constantly testing the central bank's decision-making.

This tug-of-war between exchange rates and inflation is pushing the Bank of Japan into an increasingly complex situation.