Japanese Yen Slips as Dollar Strengthens Despite Inflation Data

On Tuesday, the Japanese yen fell to around 147.3 per dollar, marking its decline in five of the last six sessions. This drop is attributed to the unwinding of yen carry trades losing steam and a stronger dollar bolstered by better-than-expected US economic data.

This decline occurred even though producer prices in Japan for July rose at their fastest pace in 11 months, highlighting ongoing inflationary pressures.

Adding to the uncertainty, a former Bank of Japan (BOJ) official indicated this week that the central bank may not raise interest rates again this year due to financial market instability. BOJ Deputy Governor Shinichi Uchida had previously stated that the bank would avoid rate hikes during periods of market turbulence.

Meanwhile, the BOJ’s July policy meeting summary revealed differing views among members. Some advocated for further rate increases, with one suggesting that rates should eventually reach at least 1%.