FX.co ★ Yen Set for Fourth Consecutive Weekly Decline

The Japanese yen weakened to around 158 per dollar on Friday, heading for a fourth straight weekly decline under sustained pressure from the wide interest rate differential between the US and Japan. Relatively low domestic rates, combined with the country’s heavy debt burden, continued to weigh on the currency.

Fresh data also showed that Japan’s personal spending fell for a ninth consecutive month in August, underscoring consumer caution in the face of persistent inflation.

On the monetary policy front, Bank of Japan board member Ayano Sato — who had opposed the central bank’s rate hike in September — stated this week that she supports a gradual, multi-stage approach to further rate increases, reinforcing expectations of continued policy tightening.

Meanwhile, Prime Minister Sanae Takaichi has continued to pursue expansionary fiscal measures despite concerns about the weak yen and rising bond yields, including a pledge to cut the consumption tax on food.