FX.co ★ Japanese Yen Weakens After Inflation Data

The Japanese yen declined to approximately 149 per dollar on Friday, halting a two-day upward momentum as investors responded to the latest inflation data. Japan’s core inflation rate eased to 3% in February, down from 3.2% in January, although it still surpassed the forecast of 2.9%. This marks the second month in a row where inflation has exceeded expectations, indicating persistent price pressures and bolstering the argument for potential interest rate hikes. Earlier in the week, the Bank of Japan maintained its policy rate at 0.5%, as widely expected. Policymakers adopted a cautious approach, choosing to evaluate the effects of global economic risks, particularly the impact of increased U.S. tariffs, on Japan’s economy. The Bank of Japan also reaffirmed its commitment to closely monitoring foreign exchange markets and their impact on economic conditions and prices. Externally, the yen was pressured by a strengthening dollar, as concerns about global growth and trade tensions affected other major currencies, prompting investor caution.