The U.K. Starmer administration announced a 26.6 billion pound tax hike in its annual budget proposal released on Wednesday.
The pound traded mixed, but the pound closed higher on the administration’s move to avoid a “truss shock.

In the foreign exchange market, there appeared to be some buying of the pound and selling of the yen as a result of the contrast between Japan’s profligate fiscal policy and the U.K.’s tax hike.
The pound sterling, which had been around 206 yen, reached the 207 yen level.

In the speech by Bank of Japan Board Member Asahi Noguchi, there was no hint of tightening in the draft of his speech, but during the Q&A session, he stated that “exchange rates are an important spillover channel” and that a weaker yen would increase the need to raise interest rates.
Although the yen strengthened slightly as a result of this statement, nothing in Commissioner Noguchi’s remarks was definitive.

The U.S. market was closed for Thanksgiving.
In the Tokyo market, which took over without any news from Europe or the U.S., dollar buying was seen toward the middle of the day, but counter selling soon followed and the price dropped sharply from 156.50 to 156.10 yen, but since there was nothing in the background, the price rebounded after a round of selling was completed.
The month-end rebalancing also attracted attention, but since the timing was after Thanksgiving, it seems that more clients moved in advance.

Even with a 0.25% rate hike, this “high market yen depreciation” will not be easily corrected.
Even in his answer to the Diet, he stated, “I don’t know if it is the high market yen depreciation.
The very attitude that he is not the cause is likely to be attacked by foreign countries for the yen’s depreciation.

Since Finance Minister Katayama’s intervention statement, the dollar’s yen head has been heavy, but it is probably just a position adjustment.
Yen selling may resume. The market will want to see if the BOJ can really raise interest rates on December 19.

If the yen continues to weaken, the BOJ will raise rates, but a rate hike under pressure will not be enough to stop the yen from weakening.
The December rate hike has already been factored in to a certain extent. If the BOJ does not raise rates in December, the yen will weaken tremendously.

If the yen exceeds 160 yen, intervention is possible, so the battle against intervention will likely be a theme going forward.
We would like to continue to push the dollar and the euro.