The yen was trading 0.4% lower at 147.47 per dollar and also dropped by the same percentage against the British pound after hitting a one-month high of 188.01 earlier in the session
The yen experienced its most significant daily drop against the dollar in a month on Tuesday amid recent comments from Japanese officials, which reduced expectations of an immediate policy shift by the Bank of Japan as soon as next week.
Meanwhile, the U.S. dollar remained relatively stable in anticipation of a crucial U.S. inflation report scheduled for later during the day. This report will offer more insight into when the Federal Reserve might begin its interest rate reduction cycle this year.
The yen was trading 0.4% lower at 147.47 per dollar and also dropped by the same percentage against the British pound after hitting a one-month high of 188.01 earlier in the session.
The decline in the yen followed statements from BOJ Governor Kazuo Ueda, who presented a slightly more pessimistic view of the country’s economy compared to January.
Finance Minister Shunichi Suzuki also mentioned on Tuesday that Japan was not yet in a position to declare victory over deflation.
These comments were made ahead of the BOJ’s upcoming policy meeting and amidst growing speculation that the central bank might eliminate its negative interest rate policy during the meeting, a move that had previously caused the yen to strengthen.
I think there is more uncertainty now, and I will expect there is going to be a bit more volatility into the Bank Of Japan meeting, said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
Whether they are going to move in March or not, I think that is really still up in the air, Tan said.
The one-week implied volatility for the dollar/yen pair, which indicates expected price fluctuations, surged to 12.115% on Tuesday, marking its highest level since December.
