Yen Weakens to ¥158/$ as Japan’s Inflation Nears BOJ Target
Japan's currency slumped to its lowest level since 1990 as accelerating wage growth and tightening labor markets push inflation toward the Bank of Japan's 2% target. The yen breached 158 against the dollar, extending its year-to-date decline to 12%.
Governor Kazuo Ueda signaled potential policy adjustments amid what he called 'a positive cycle' of rising wages and prices. The BOJ's April outlook report noted service prices growing at their fastest pace in three decades, with Tokyo-area inflation—a national bellwether—hitting 2.7%.
Market participants now price 78% odds of a rate hike by July. 'The wage-inflation passthrough is finally happening,' said SMBC Nikko strategist Daisuke Moriyama, noting spring wage negotiations yielded 5.3% average pay hikes—the most since 1991.
