BofA: Yen Depreciation Driven by Offshore Trading During London and New York Sessions
What happened
Bank of America analysts reported that the Japanese yen’s decline between the second quarter of 2025 and the second quarter of 2026 occurred exclusively during London and New York trading sessions. This contrasts with the period from 2021 through mid-2024, when the currency weakened during both domestic and international trading hours. BofA attributed the offshore selling pressure to an artificial intelligence-driven stock market rally and expectations of gradual interest rate increases by the Bank of Japan. These factors recently weakened following coordinated currency intervention by Japanese and US authorities in July.
From econotimes.com
Why it matters
The report highlights a significant shift in global foreign exchange market dynamics, attributing the yen’s prolonged depreciation to offshore trading activity. The Bank of Japan’s monetary policy and expectations for rate hikes are key drivers of currency appeal and stability. This analysis provides insight into how global trading sessions influence currency valuation.
From econotimes.com
Who's involved
- Bank of AmericaConducted the analysis on the yen's depreciation and trading dynamics
- Bank of JapanIts monetary policy and rate hike expectations are central to the yen's appeal
- JapanThe nation whose currency is the subject of the depreciation analysis
- FEDInvolved in coordinated currency intervention with Japanese authorities
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- BOJSpeculative
BoJ policy direction might affect currency stability and market expectations.
- FEDSpeculative
The FED's role might be influenced by expectations regarding coordinated currency intervention with Japanese authorities.
- Goldman SachsSpeculative
Increased FX volatility and shifts in Bank of Japan policy might boost trading revenue.
- CitigroupSpeculative
Increased FX volatility and shifts in Bank of Japan policy might boost trading revenue.
- Morgan StanleySpeculative
Increased FX volatility and shifts in Bank of Japan policy might boost trading revenue.
Keep exploring
The entities involved
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Bank of Japan
the central bank of Japan
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Bank of America
American multinational banking and financial services corporation
Related events
- BoJ intervention is expected due to weak yen, following reports on Euro area inflation data.
- BOJ rate hike speculation causes Yen surge and risk asset dumping, leading to foreign reserve depletion and market shifts affecting digital assets.
- Markets are preparing for the Fed's Jackson Hole symposium while focusing on the Bank of Japan's upcoming rate hike.
- Central bank policies are diverging, with the Singapore dollar gaining appeal as an alternative to the yen amid BOJ rate hikes.
- Global central bank actions, specifically from the Bank of Japan, are noted to affect the Reserve Bank of India's policy path.