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The yen continues to depreciate, the Bank of Japan sends a signal of policy shift, and the Asia-Pacific market fluctuates
forex5 months before
Summary：Bank of Japan (BOJ) officials issued a rare warning this week that they may intervene in the exchange rate to curb the depreciation of the yen, causing the market to reassess its loose monetary policy stance. After the news was released, stock markets and exchange rates in the Asia-Pacific region fluctuated significantly.
June 17, 2025 — Joint report from Tokyo and Singapore
The Bank of Japan said on Monday that it has noticed the imported inflation pressure brought about by the continuous depreciation of the yen against the US dollar and is ready to "take appropriate measures" if necessary. This is the first time that the Japanese authorities have publicly signaled a "tight policy" since the brief exchange rate intervention in 2022.
The exchange rate of the Japanese yen against the US dollar has now fallen below the 160 mark , hitting a new low since 1990, mainly affected by the Federal Reserve's maintenance of high interest rate policy and the country's weak economic recovery.
Shinichi Uchida, deputy governor of the Bank of Japan, said at a forum in Tokyo:
“We cannot ignore the side effects of a rapid depreciation, especially the pressure on household costs and prices of raw materials for businesses.”
The market reacted immediately. The Nikkei index fell 1.7% at one point, then partially rebounded; while major Asia-Pacific currencies such as the Korean won, Taiwan dollar, and Australian dollar strengthened against the yen in the short term, indicating that the market expects the BOJ to shift from its current ultra-loose stance to a more neutral attitude.
📊 Other market reactions:
The US dollar index fell slightly and closed at 104.3
International gold prices rose to $1,988 per ounce, supported by safe-haven demand
Asia-Pacific funds flow to high-rated bonds and US technology stocks
✅ Analysts’ opinions:
Masahiro Inoue, chief strategist for Asia at Goldman Sachs, said:
“If the Bank of Japan hints at exiting negative rates or reducing bond purchases, even on a small scale, it could have ripple effects on global foreign exchange markets.”
🔚 Conclusion:
As the yen depreciation problem escalates, global investors will pay more attention to the possibility of a policy shift by the Bank of Japan in the coming months. This subtle shift may also become one of the starting points for the "rebalancing" of global monetary policy.
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