■　Dollar-Yen Rises to 149.76 Yen! Views of the Ministry of Finance and IMF”

■　Overview of Exchange Rate Trends and Underlying Factors in the Foreign Exchange Market

The foreign exchange market is influenced by various factors such as international economic developments, interest rates, stock prices, and other elements, and the relative value of major currencies fluctuates on a daily basis.

In this article, we focus on the trends in the Dollar-Yen exchange rate in the New York foreign exchange market on October 16, 2023, and explore the underlying factors.

■　Strength in the Dollar-Yen Exchange Rate and Underlying Factors

On October 16, 2023, the Dollar-Yen exchange rate showed strength in the foreign exchange market.

At 24:00, the exchange rate was 149.63 yen per dollar, trading at approximately 19 yen higher than the 149.44 yen at 22:00.

Several significant factors are influencing this movement.

■　Rise in U.S. Bond Yields

First, the rise in U.S. bond yields had an impact on the Dollar-Yen exchange rate.

The long-term bond yields in the U.S. market rose to the 4.72% range, positioning the dollar as an attractive currency and encouraging the sale of yen in favor of buying dollars.

Higher bond yields tend to generate more income for investors, increasing demand for the dollar.

■　Influence of High U.S. Stock Prices

Furthermore, the rise in U.S. stock prices also contributed to the strength in the Dollar-Yen exchange rate.

In the foreign exchange market, during “risk-on” situations where investors are willing to take on risk, it is common for the yen to be sold and the dollar to be bought.

On this day, the Dow Jones Industrial Average rose by over 410 points at one point, which acted as a factor contributing to “risk-on” and led to the selling of yen.

As a result, the Dollar-Yen exchange rate briefly rose to today’s high of 149.76 yen.

■　Resistance Line at Last Week’s High

On the other hand, it was noted that the high of 149.83 yen recorded at the end of the previous week is currently being perceived as a short-term resistance line in the market.

Therefore, the market saw a brief consolidation, but the trend of strength in the Dollar-Yen exchange rate continues.

Foreign exchange market participants are closely monitoring the movements of U.S. bond yields and stock prices while keeping an eye on the Dollar-Yen exchange rate.

■　Stability in the Euro-Dollar Exchange Rate and Factors of Variation

Next, let’s focus on the Euro-Dollar exchange rate.

The Euro-Dollar exchange rate has been relatively stable, with a tendency for strong support at lower levels.

On October 16, 2023, at 24:00, one Euro was trading at 1.0550 dollars, approximately 0.0008 dollars higher than the 1.0542 dollars at 22:00.

Let’s take a closer look at the characteristics of this market and the underlying factors.

■　Rise in U.S. Bond Yields and Euro Selling

In the Euro-Dollar exchange rate, the rise in U.S. bond yields prompted Euro selling and Dollar buying.

High U.S. bond yields position the dollar as an attractive currency and tend to encourage Dollar buying among investors.

On this day as well, the rise in U.S. bond yields demonstrated the strength of the dollar in the Euro-Dollar exchange rate.

■　Euro Buying due to the Rise in Western Stock Prices

On the other hand, the rise in Western stock prices acted as a “risk-on” factor in the Euro-Dollar exchange rate, leading to Euro buying and Dollar selling.

In “risk-on” situations, investors tend to be more willing to take on risk, and the Euro is considered a relatively stable currency.

Therefore, Euro buying was reinforced, and the Euro-Dollar exchange rate briefly rose to 1.0555 dollars.

■　Strength in the Euro-Yen Exchange Rate and “Risk-On” Factors

In the foreign exchange market, the Euro-Yen exchange rate is also one of the currency pairs that garners attention.

On October 16, 2023, the Euro-Yen exchange rate maintained a firm trend, with one Euro trading at 157.86 yen at 24:00, approximately 31 yen higher than the 157.55 yen at 22:00.

What underlying factors are involved in this movement?

■　Strength of the Dollar-Yen Exchange Rate due to Resilience in U.S. Stock Prices

The Euro-Yen exchange rate is experiencing “risk-on” yen selling due to the resilience of U.S. stock prices.

On this day, the Dow Jones Industrial Average rose by over 410 points at one point, indicating a strong trend in the U.S. stock market.

In “risk-on” situations, there is a tendency for investors to sell yen and increase investments in risk assets.

As a result, the Euro-Yen exchange rate briefly rose to 157.99 yen and maintained its strength.

■　Movement of Leading Cryptocurrency Bitcoin and the Role of the SEC

The trends in the foreign exchange market are not the only topic of interest; the cryptocurrency market is also under scrutiny.

Particularly, Bitcoin has become a significant asset for many investors and market participants.

On October 16, 2023, Bitcoin exhibited a volatile performance.

The rapid surge in Bitcoin’s price, reaching around $30,002 against the dollar and the 4.47 million yen range against the yen, was influenced by speculations regarding the approval of a Bitcoin physical ETF by the U.S. Securities and Exchange Commission (SEC).

Market participants are closely monitoring the SEC’s actions, which strengthened buying interest in Bitcoin.

■　Role of the SEC and Its Impact on the Market

The SEC is the regulatory authority overseeing the U.S. securities market, and its decisions regarding the approval of Bitcoin physical ETFs have significant implications for the market.

The establishment of regulations and the official classification of cryptocurrencies as securities represent crucial steps for the cryptocurrency market.

Therefore, the role of the SEC is highly important for market participants, and the SEC’s announcements and comments can lead to significant fluctuations in Bitcoin’s price.

■　Selling due to BlackRock’s Comments

However, the market’s reaction to speculations about the SEC’s actions was short-lived.

BlackRock, a major asset management firm, issued a statement confirming that they are “continuing to review” the Bitcoin physical ETF, negating the earlier reports.

As a result, the market sentiment turned bearish, and the price of Bitcoin experienced a sharp decline.

This incident highlights the volatility of the cryptocurrency market and the market’s sensitivity to regulatory news.

■　Japanese Government’s Stance on the Foreign Exchange Market

Finally, let’s briefly discuss the Japanese government’s position in the foreign exchange market on October 16, 2023.

Kanda Masato, the Vice Minister of Finance, emphasized that when there are unusual movements in the foreign exchange market that deviate from the economic fundamentals, “appropriate measures will be necessary” and suggested a willingness to intervene in the foreign exchange market in response to speculative actions.

■　IMF’s Perspective and the Japanese Government’s Stand

In response to this, Sanjaya Panth, Deputy Director of the Asia-Pacific Department at the International Monetary Fund (IMF), expressed the view that the recent weakening of the yen is reflecting fundamentals such as interest rate differentials with the United States.

He implied that intervention is unnecessary.

While Kanda did not directly counter the IMF’s view, he pointed out the need to “analyze data and its background to make a judgment” regarding the foreign exchange market trends, emphasizing a stance of comprehensive assessment, considering various factors, not just interest rates.

■　Conclusion

The foreign exchange market is subject to constant fluctuations influenced by a multitude of factors, and the relative value of currencies changes daily.

On October 16, 2023, the Dollar-Yen exchange rate was supported by the rise in U.S. bond yields and the strength of U.S. stock prices.

On the other hand, the Euro-Dollar exchange rate maintained relative stability, keeping a watchful eye on the trends in U.S. bond yields and Western stock prices.

Additionally, the cryptocurrency market, particularly Bitcoin, exhibited significant volatility due to speculations regarding SEC regulations.

The Japanese government is exploring appropriate responses in the foreign exchange market.

The foreign exchange market is highly volatile, and careful analysis and risk management are essential for investors.