In the Tokyo foreign exchange market on the morning of Monday the 19th, the yen struggled in the upper 157 range against the dollar. At 10:00 a.m., the rate was 157.92-94 yen, 8 sen stronger for the yen and weaker for the dollar compared with 5:00 p.m. the previous day. Bank of Japan Governor Kazuo Ueda’s stance favoring continued rate hikes supported the yen, while yen selling and dollar buying by Japanese importers and other commercial players capped the upside.
At 8:30 a.m., the rate was 157.82-83 yen, 18 sen stronger for the yen and weaker for the dollar compared with 5:00 p.m. the previous day, but the gains narrowed as trading progressed. Ahead of the 10:00 a.m. fixing, “there was dollar demand,” a foreign exchange official at a Japanese bank said, with commercial yen selling weighing on the market. The Nikkei Stock Average’s resilience in the morning Tokyo stock market also weakened buying of the yen, which is viewed as a low-risk currency.
The yen also pared gains against the euro. At 10:00 a.m., the rate was 177.27-30 yen per euro, 30 sen stronger for the yen and weaker for the euro compared with 5:00 p.m. the previous day. In early trading, it had reached 177.03-05 yen, 54 sen stronger for the yen and weaker for the euro. The euro was firm against the dollar, at 1.1225-26 dollars at 10:00 a.m., 0.0013 dollars weaker for the euro and stronger for the dollar compared with the previous day.
What supported the yen was the view on the Bank of Japan’s monetary policy. Governor Ueda, at a press conference on the 16th held in conjunction with the G20 Finance Ministers and Central Bank Governors Meeting in Thailand, said of the underlying inflation rate that it is “broadly near 2%, and we cannot tolerate further increases.” The view that the BOJ will proceed with rate hikes spread, leading to yen buying.
At the House of Councillors Budget Committee on the morning of the 19th, Ueda noted that the underlying inflation rate “is currently getting quite close to 2%.” He also expressed the view that “if the market recognizes that short-term interest rates are not being adjusted at an appropriate pace and that concerns or uncertainty about the outlook for upside inflation risks increase, long-term interest rates could rise.” The market was once again reminded of the BOJ’s stance of continuing rate hikes.
The deterioration in investor sentiment caused by the decline in U.S. stock prices at the end of last week also encouraged yen buying in early trading. In the eurozone, large-scale protests demanding measures against rising prices and improvements in the education environment took place across France on the 17th, and riots also broke out. Concerns about France’s fiscal management are making the market prone to yen buying and euro selling.
Market participants said “there are few notable trading cues, and price movements are small,” and the market is likely to continue to focus on commercial flows and the BOJ’s policy stance for the time being.
Key exchange rates are as follows.
| Currency Pair | 10:00 a.m. | vs. 5:00 p.m. Previous Day |
|---|---|---|
| Dollar/Yen | 157.92-94 yen | 8 sen stronger for yen, weaker for dollar |
| Euro/Yen | 177.27-30 yen | 30 sen stronger for yen, weaker for euro |
| Euro/Dollar | 1.1225-26 dollars | 0.0013 dollars weaker for euro, stronger for dollar |
Note: Comparisons are with 5:00 p.m. the previous day. The dollar/yen rate at 8:30 a.m. was 157.82-83 yen.






