Bank of Japan Holds Rates Amid Yen Weakness, Trade Uncertainty

The Japanese yen has weakened to around 145 per dollar amid disappointing economic indicators such as declining exports and machinery orders, as well as mounting concerns over domestic demand. The Bank of Japan (BOJ) recently left interest rates unchanged at 0.5% and signaled a gradual approach to reducing its bond-buying program starting next April, reflecting a cautious stance amid trade uncertainty and global economic conditions. Efforts to reach a US-Japan tariff agreement faltered at the recent G7 summit, with Prime Minister Shigeru Ishiba and President Donald Trump failing to secure a deal, further pressuring the yen. Analysts expect the yen to trade within a range of 143.50 to 145.50, as the BOJ may delay rate hikes until at least early 2026 due to tariff and geopolitical uncertainties. Meanwhile, geopolitical tensions surrounding the Middle East conflict and rising oil prices have bolstered the US dollar and raised concerns about future Federal Reserve policy moves. The BOJ's cautious monetary policy reflects its aim to support the economy amid these external challenges while monitoring economic and trade developments.