FX.co ★ Japanese Yen Rises as Core Inflation Accelerates

The Japanese yen moved closer to 145 per dollar on Friday, regaining ground following its recent decline. This movement comes after Japan's core inflation rose for the third consecutive month, reaching 3.7%—the highest since January 2023. The increase in inflation strengthens the expectation that the Bank of Japan might continue to tighten its monetary policy to address ongoing inflationary pressures. Earlier in the week, the Bank of Japan opted to keep its benchmark interest rate unchanged at 0.5%. However, they observed that businesses are still transferring wage increases onto prices, which sustains elevated core inflation rates. Bank of Japan Governor Kazuo Ueda emphasized the bank's commitment to a data-driven approach and indicated a willingness to consider further rate hikes if inflation persists. Although the yen experienced a recovery on Friday, it remains down nearly 1% for the week. This decline is due to a stronger US dollar, fueled by increased demand for safe-haven assets amid rising tensions between Israel and Iran, and the possibility of US intervention in the region.