Rising JGB yields, JPY depreciation and the search for policy tools

Research evidence excerpt

Rising JGB yields, JPY depreciation and the search for policy tools

Global Markets Research

24 July 2026JPY Weekly

Foreign Exchange - Global

Research AnalystsRising JGB yields, JPY depreciation and the

Global FX Strategysearch for policy tools

Yujiro Goto - NSC

Key events next week: The BOJ meeting, FOMC, Tokyo CPI, yujiro.goto@nomura.com

intervention data and risks. +81 3 6703 1120

Yusuke Miyairi, CFA - NIplc

• Rising oil prices and expectations of Fed hikes have lifted USD, pushing USD/JPY yusuke.miyairi@nomura.com

close to 164. The market is testing the authorities’ intervention threshold. Monetary +44 (0) 20 7102 4145

policy decisions in Japan and the US are ahead, but for now, upside risks to USD/JPY

Tomoki Hideshima - NSC are likely to remain in focus. tomoki.hideshima@nomura.com

• As JGB yields rise and JPY weakens further, the Takaichi administration may become +81 3 6703 1427

less tolerant of these trends. With approval ratings also falling in opinion polls, it will be Yuki Kodera - NSC

important to see whether policymakers respond through measures such as: 1) policies yuki.kodera@nomura.com

to encourage more domestic bond investment, 2) allowing the BOJ to accelerate the +81 3 6703 1281

pace of its rate hikes, and 3) JPY buying intervention.

• JPY week ahead: BOJ and Fed meetings may increase volatility. The BOJ is

expected to hold rates steady, but any hints of a September hike would be closely

watched. Authorities’ intervention stance will also be closely watched.

USD/JPY rises to the 163 level

USD/JPY rose to the 163 level on 21 July, reaching its highest level since 1986. As the US

resumed attacks on Iran, persistently high crude oil prices likely acted as a factor

weakening JPY. In addition, concerns remain over a surprise rate hike by the Fed at the