EBC Markets Briefing | Yen rally stalls as BOJ opted to keep rates steady

The yen fell from a more than two-month high on Friday after Tokyo reportedly conducted massive yen-buying, dollar-selling intervention to combat rising costs of living.

Today's data showed Japanese inflation continuing to pick up amid support from elevated energy prices, especially as a resurgence in hostilities disrupted oil and gas supplies from the Middle East.

The BOJ kept its policy rate steady, as it warned that core inflation could exceed its 2% target. It came as benchmark 10-year Japanese government bond yield has eased slightly from multi-decade highs

Analysts say BOJ Governor Ueda is trapped between PM Takaichi's dovish administration opposing rate hikes, and the urgent need to defend the yen to curb rising import costs and inflation.

Japan recorded a $31 billion surplus from its special foreign exchange reserves account for the fiscal year ending March 2026, marking the second-highest figure on record.

The US Treasury Department noted that the yen remains weak despite smaller interest rate gaps between the US and Japan, warning that excessive currency swings are harmful.

EBC Financial Group analyst says, the yen staged a sharp rally around 200 SMA. The setup heavily backed the emergence of fresh buying at lower levels, with potential support around 161.45 per dollar.

Asset Recap

As of market close on 30 July, among EBC major products, Micron Technology shares led gains after Samsung Electronics said it expected chip shortages to worsen and extend into 2028.

Marlboro maker Altria Group fell short of Q2 earnings estimates as macroeconomic uncertainty ‌weighed on spending patterns, hurting demand for its premium cigarettes and nicotine pouches.

Japan and South Korean markets were choppy as recent steep declines prompted bargain hunting. Historically it is possible for investors to lose money even if the technology they are backing succeeds.

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