The Japanese yen, paired with the US dollar, continues its decline. The current USDJPY exchange rate is 149.79.
The primary reason for the weakening of the JPY exchange rate is the global difference in interest rates between the US Federal Reserve and the Bank of Japan.
At the same time, the Japanese economy appears to be in good shape, or at least this is what the Tankan data reveals. According to the figures released today, the non-manufacturing sector is displaying its strongest activity performance in 32 years. The service sector is benefitting from the full restoration of economic activities following the pandemic.
Confidence among major manufacturers has surpassed expectations, and business sentiment in the service sector has reached a multi-year high. The Large Business Sentiment Index increased by 9 points in September, up from the previous 5 points. Automakers and food and beverage industries are among those feeling more optimistic than others.
The service sector sentiment index rose to 27 points, the highest since 1991.
The weakening of the yen is amplifying these effects. Prices for tourists visiting the country appear to be lower, stimulating activity in the non-manufacturing sector. The weakened yen is also discouraging overseas travel among residents, redirecting all recreational interests within the country. Thus, the devaluation of the JPY has become another supporting factor for the economy.