Yen Weakened by US-China Trade Deal, BoJ Signals Cautious Stance
Yen Holds Losses Following US-China Trade Deal
The Japanese yen remained under pressure on Tuesday, hovering around 148 per dollar after shedding about 2% in the previous session. This decline comes as investors embraced the initial trade agreement between the US and China, driving up demand for the US dollar.
Over the weekend, trade negotiators from both countries met in Switzerland and agreed to a 90-day truce in their escalating trade war. The deal involves reducing tariffs to 30% for the US and 10% for China, offering a glimmer of hope for a resolution. This positive development boosted investor confidence in the US dollar, leading to a stronger greenback against other currencies, including the yen.
Japan Pushes for Auto Exclusions
Meanwhile, Japanese Prime Minister Shigeru Ishiba made it clear that Japan wouldn’t accept any initial trade deal with the US that excludes provisions for automobiles. He urged the US to reconsider its 25% tariff on Japanese cars, highlighting the significant impact these tariffs have on the Japanese economy.
BOJ Remains Cautious Amid Economic Uncertainty
Adding to the yen’s woes, the latest summary of opinions from the Bank of Japan (BOJ) revealed that policymakers are taking a cautious approach due to heightened uncertainty surrounding economic and price developments. BOJ Deputy Governor Uchida also cautioned that US tariffs continue to exert downward pressure on Japan’s economy.
