British Pound retreats against Japanese Yen as Japan vows debt control
- The British Pound slides to near 208.40 against the Japanese Yen as the later outperforms.
- Japan PM Takaichi vows to exercise tight control on fresh debt.
- The BoJ is expected to tighten monetary conditions further.
The British Pound (GBP) slumps 0.3% to near 208.40 in the European trade on Monday after a flat opening at around 209.10. The cross comes under pressure as the Japanese Yen gains after Japanese Prime Minister (PM) Takaichi Sanae signaled that the government will exercise tight control on debt issuance.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.49% | 0.11% | -0.08% | 0.06% | -0.09% | 0.47% | 0.12% | |
| EUR | -0.49% | -0.34% | -0.57% | -0.41% | -0.40% | -0.09% | -0.33% | |
| GBP | -0.11% | 0.34% | -0.23% | -0.06% | -0.05% | 0.23% | 0.01% | |
| JPY | 0.08% | 0.57% | 0.23% | 0.16% | 0.11% | 0.48% | 0.25% | |
| CAD | -0.06% | 0.41% | 0.06% | -0.16% | -0.04% | 0.29% | 0.05% | |
| AUD | 0.09% | 0.40% | 0.05% | -0.11% | 0.04% | 0.30% | 0.08% | |
| NZD | -0.47% | 0.09% | -0.23% | -0.48% | -0.29% | -0.30% | -0.24% | |
| CHF | -0.12% | 0.33% | -0.01% | -0.25% | -0.05% | -0.08% | 0.24% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
“We will control the annual debt issuance amount appropriately while scrutinising the economy, prices, tax revenues, interest rates, debt-servicing costs, and market developments,” PM Takaichi said.
The remarks from Japan PM Takaichi regarding controlled debt issuance have improved the safe-haven appeal of the Asia-Pacific currency at a time when the Euro (EUR) faces immense selling pressure due to heightened French fiscal risks.
Japan PM Takaichi’s comments on fiscal policy pointing to moderate debt growth have brought a slight relief for bondholders. At press time, 10-year yields on Japanese bonds are slightly down to near 3.08%, but are still close to its all-time high of 3.13% posted last week.
On the monetary policy front, hotter-than-projected Tokyo Consumer Price Index (CPI) data for September, released on Friday, has prompted the hopes of further Bank of Japan (BoJ) tightening in the near term.
Japan inflation data keeps BoJ on policy alert
Analysts at MUFG/BTMU note that the latest inflation release Japan has kept market attention firmly on underlying price pressures. MUFG/BTMU highlight that "headline Tokyo CPI, which serves as a leading proxy for nationwide inflation, accelerated to 2.7%yoy in September, above the 2.5% consensus and 1.9% in August." Moreover, underlying price momentum strengthened notably, with "core Tokyo CPI excluding fresh food and energy" rising "markedly to 3.0%yoy, above the 2.5% consensus and 2.0%yoy in August, marking its highest reading under the Takaichi administration."
MUFG/BTMU judge that these readings "should keep the BoJ attentive to inflation and the need for policy tightening," reinforcing the focus on how evolving price dynamics may shape the policy stance in Japan.
Meanwhile, the British Pound is broadly under pressure, except against the Euro (EUR), amid doubts regarding whether the Bank of England (BoE) will hike interest rates in the November policy meeting.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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