Yen Weakness Persists Amid US Rate Hikes and Rising Energy Costs

The Japanese yen remains under pressure due to sustained high interest rates in the US and rising energy import costs for Japan.

According to ING strategists, the Federal Reserve's policy is a key driver of the yen's direction, keeping the dollar strong against most major currencies including the yen. The BoJ's modest rate hikes have not been enough to close the interest rate gap with the US, making the dollar more attractive.

Elevated energy costs are also weighing on the yen, as Japan is heavily reliant on energy imports. Global energy price fluctuations widen Japan's trade deficit and put downward pressure on the currency.