FX.co ★ Yen Weakens Despite Hawkish Ueda Remarks

The Japanese yen hovered around 158.5 per dollar on Tuesday after falling in the previous session, struggling to rebound despite hawkish comments from the Bank of Japan’s leadership. Governor Kazuo Ueda signaled that underlying inflation is nearing the central bank’s 2% target, supported by a moderate economic recovery and a tight labor market. He also pointed to supply-side price pressures driven by higher energy costs linked to the Middle East, as well as demand-driven inflation fueled by robust AI-related investment and activity. Even so, the yen remained under pressure due to persistent carry trades, as Japan’s comparatively low interest rates continue to make the currency less attractive. The BOJ’s gradual approach to policy tightening is likewise viewed as too slow to narrow the gap with interest rates in other major economies.