The Australian dollar has reached its strongest level against the Japanese yen in roughly 35 years, with the AUD/JPY pair hitting 114.7540 on June 2. This surge reflects the widening gap between the Reserve Bank of Australia’s hawkish stance on inflation and the Bank of Japan’s accommodative monetary policy. The yen’s weakness has been a multi-year trend driven by the persistent interest rate differential between Japan and Australia, the US, and Europe. Tokyo has conducted significant yen-buying interventions, including a coordinated effort with the US on July 31 estimated at up to $59 billion, pulling AUD/JPY back to around 110-111.5 by early August. The Australian dollar’s strength against the yen also reflects global risk appetite and the AUD’s sensitivity to world growth prospects and Chinese demand.
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