Yen weakens 0.1% to 147.37 per dollar

Yen weakens 0.1% to 147.37 per dollar

The Japanese yen has weakened by 0.1% to 147.37 per dollar, reflecting market expectations of upcoming Bank of Japan (BOJ) interest rate hikes and the imminent launch of yen-backed stablecoins. This development comes as Japan prepares to introduce its first fully collateralized yen-denominated stablecoins later this year.

The yen's depreciation follows recent reports indicating that the BOJ could raise interest rates in the coming months. Hiroshi Nakazawa, head of Hokuhoku Financial Group, one of Japan's largest regional banks, has stated that the BOJ could raise interest rates in either October or December, assuming "things go smoothly" [1]. This outlook aligns with broader market consensus on upcoming rate hikes, which could drive investors towards yen-backed stablecoins.

The expected rate hikes and strengthening yen have already impacted cryptocurrency markets. The BTC/JPY pair listed on bitFlyer has dropped 8% this month, hitting its lowest level since July 9 [1]. This sell-off has triggered a classic double top bearish reversal pattern on daily charts, suggesting further downside risk for bitcoin priced in yen.

Additionally, Japan is preparing to launch its first yen-denominated stablecoins. Tokyo-based fintech firm JPYC plans to register as a money transfer business and lead the rollout of a JPY-pegged stablecoin trading at a 1:1 ratio with the Japanese yen [1]. This development is part of Japan's effort to create blockchain-based representations of its national currency, following years of careful preparation.

Monex Group, another Tokyo-based financial services company, has also announced plans to explore launching its own yen-backed stablecoin. The company sees potential for enhancing yen-denominated international remittances and corporate settlements [1]. While the company hasn't fully committed to an issuance yet, it has indicated that it will respond properly to this emerging market opportunity.

The timing of these stablecoin launches aligns well with the expected monetary policy changes. Both leading bankers and traders anticipate the BOJ will hike interest rates in the coming months, while the U.S. Federal Reserve is expected to move in the opposite direction [1].

The strengthening yen and expected rate hikes have also impacted other financial markets. Yields on longer-duration Japanese government bonds have climbed to multi-decade highs, reflecting fiscal concerns and strong expectations of BOJ rate hikes. The 30-year JGB yield recently surged to a record high of over 3.2%, while the 10-year yield reached 1.64%, levels not seen since 2008 [1].

The narrowing gap between U.S. and Japanese 10-year yields has further enhanced the yen's appeal. The yield differential has tightened to 2.62%, the lowest since August 2022, suggesting potential appreciation in the yen [1].

While Japan prepares its stablecoin launch, traditional financial institutions continue warming to digital assets. Wall Street heavyweight JPMorgan plans to commit up to $500 million to Numerai, a crypto-friendly hedge fund known for using artificial intelligence and crowdsourced models [1]. The fund delivered more than 25% net returns last year by blending crowdsourcing, AI, crypto, and other quant-driven strategies.

The FSA is expected to approve Japan's first yen-denominated stablecoin as early as this fall, marking a major step forward in Japan's digital currency landscape [1].

References:
[1] https://blockonomi.com/japan-set-to-launch-first-yen-backed-stablecoins-in-fall-2025/