The Japanese yen is on course to post its first weekly loss in a month, weakening against major currencies on Friday as market sentiment turned optimistic over progress in trade negotiations between the United States and key Asian partners.
The yen slipped in Asian trading, with the dollar gaining 0.6% to ¥143.45, after earlier touching an intraday low of ¥142.56. This follows a 0.6% gain for the yen on Thursday, snapping a two-day losing streak amid investor uncertainty over trade signals from Washington.
So far this week, the yen is down around 1% versus the greenback, positioning it for its first weekly decline since early March.
Trade Hopes Lift Dollar
The pullback in the yen reflects renewed hopes that trade frictions may ease, after reports suggested early progress in bilateral discussions between the US and both Japan and South Korea. At the same time, Beijing is reportedly weighing tariff exemptions on select US imports, reinforcing optimism that broader trade tensions may be softening.
Following a meeting with US Treasury Secretary Scott Bessent, Japan’s Finance Minister noted that no discussions on currency targets had taken place—a response to recent criticism from former President Donald Trump, who alleged Japan was weakening the yen to boost exports.
Separately, South Korean officials indicated that both sides are working toward establishing a clear roadmap before rolling back mutual tariffs as early as July.
Inflation Pressures Mount in Tokyo
Data released earlier Friday showed core consumer prices in Tokyo rose 3.4% in April, above the 3.2% forecast and significantly higher than March’s 2.4%. This marks the second consecutive month of accelerating inflation, potentially raising pressure on the Bank of Japan (BOJ) to tighten policy.
BOJ Governor Kazuo Ueda reaffirmed that interest rates would rise if inflation aligns with the bank’s 2% target, though he emphasized a cautious approach, given uncertainty surrounding the impact of US trade policy on Japan’s economy.
Adding to the caution, a senior IMF official suggested this week that the BOJ may delay its next rate hike until there is greater clarity on the trajectory of US tariffs and their global implications.
