Turbulent Week for Yen Amid Inflation Concerns and Global Economic Shifts

The yen climbed on Friday after Japan's newly appointed finance minister expressed concern about foreign exchange fluctuations, though it remained on track for its weakest monthly showing against the dollar since July. A week marked by volatility saw a brief yen rally, triggered by U.S. Treasury Secretary Scott Bessent's criticism of the Bank of Japan's cautious rate approach. Despite the remarks, BOJ policymakers held steady on monetary policy, dampening hopes among yen investors.

In Tokyo, inflation dynamics presented a complex picture for the Bank of Japan. The yen gained strength slightly as core consumer prices rose 2.8% year-over-year in October, a figure surpassing expectations and indicating persistent inflation in the capital. This inflationary pressure adds another layer to the Bank of Japan's policy challenges, even as the yen's weakness draws political focus, according to currency strategist Sim Moh Siong of the Bank of Singapore.

Globally, October proved challenging for currencies. The yen declined by 4% against the dollar, tracking close to a historic low against the euro. The dollar index reached three-month highs amid central bank decisions and geopolitical developments. Sterling's dip, amidst political and economic uncertainty, compounded the complex global currency landscape, influenced also by stable dollar-yuan dynamics and China's economic data.