Japanese Yen Struggles as Carry Trade Continues Amid Global Economic Uncertainty
The Japanese Yen (JPY) has maintained its position near a four-decade low against the US Dollar (USD), as a stark contrast in monetary policy between Japan and other major economies continues to fuel the so-called carry trade.
This week, the USD/JPY pair edged lower on Friday due to cautious market sentiment ahead of a potential government intervention to support the JPY. However, spot prices remain near the 164.00 mark, which was touched on Thursday.
The BoJ's recent rate hike to 1%, its highest since 1995, has not significantly altered borrowing costs in Japan relative to other major economies, including the US. The difference between interest rates remains a key factor supporting the carry trade.
The ongoing conflict in the Middle East has contributed to energy supply disruptions, which have lifted crude oil prices to a fresh high since June 11 on Thursday.