Rising Japanese Yen may drive up car prices in Pakistan

August 05, 2024 (MLN): The Japanese Yen soared to its highest level against the US Dollar since January on Monday amid a broad selloff in financial markets due to fears of a recession in the world's largest economy.

The currency's appreciation can drive up car prices in Pakistan, according to brokerage house Ismail Iqbal Securities.

"This significant appreciation could impact local auto manufacturers margins going forward or else they have to pass on the impact to sustain margins," the brokerage house said.

The global market selloff, which began last week, was triggered by weak US jobs data that heightened fears of a recession in the US and increased bets on more significant rate cuts by the Federal Reserve.

The Yen surged 12.7% from its July’s low to 143.56 a dollar.

The sharp appreciation of the currency has gathered pace since the Bank of Japan unexpectedly hiked interest rates on July 31.

Yields on benchmark Japanese government bonds slumped by most in more than two decades.

The benchmark 10-year Japanese government bond yield slid 20.5 basis points to 0.75%, the most since 1999.

Meanwhile, Japanese stocks tumbled into a bear market, with the main stock gauge falling by around 24% from its recent highs.

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