Japan's Finance Ministry plans to set the key rate used to calculate the country's interest payments at 2%. This is the so-called cumulative interest rate used for calculating Japan's debt service costs, and will be set for the initial budget for the year beginning April 2025. In August, when the ministry prepared budget requests from other ministries, the rate was tentatively set at 2.1 %, up from 1.9 % for the current fiscal year.
The latest provisions are expected to be approved by the cabinet on Friday as part of the initial budget plan.
The higher rate likely reflects a gradual rise in yields on government debt as the Bank of Japan continues to stabilize its monetary policy. The central bank raised interest rates for the first time since 2007 in March, followed by another increase in July, and another is expected early next year.
Japanese bond yields have remained high in recent weeks amid looming uncertainty over the US economy. Promises by new incoming US President Donald Trump, including higher tariffs on imported goods and corporate tax cuts, are seen as potentially inflationary for the world's largest economy.
The Fed's plans for more cautious policy easing announced last week will generally support the US dollar in the short to medium term, but overall, Fed policy easing remains imminent.
These latest statements from the Fed and the Japan's Finance Ministry confirms the USDJPY pair's weakening course.
The overall recommendation is to sell USDJPY.
Profits should be taken at the level of 151.230. A Stop loss could be set at the level of 161.800.
The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
