SMBC Nikko Securities: If the Federal Reserve raises interest rates, it may increase the tightening pressure on the Bank of Japan

(1) SMBC Nikko Securities strategist Ataru Okumura stated that if inflation prompts the Federal Reserve to raise interest rates, it could increase tightening pressure on the Bank of Japan. (2) Since the significant interest rate gap with the United States has long been a core driver of yen weakness, any new round of global tightening could expose the Bank of Japan's risk of being relatively slow to raise rates. (3) Although concerns about Japanese government intervention may prevent the USD/JPY from significantly exceeding 160, investors are skeptical about the sustainability of intervention measures, so the Bank of Japan may be forced to raise rates at a slightly faster pace.