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The Australian Dollar/Japanese Yen (AUD/JPY) pair has faced pressure, declining to around 100.40. This comes as the Reserve Bank of Australia (RBA) holds its Official Cash Rate (OCR) steady at 3.6%, owing to ongoing inflation concerns.
The RBA has maintained the same rate for two consecutive meetings, as inflation has accelerated. The Consumer Price Index rose at 1.3% in the third quarter, surpassing estimates and prior readings. The Producer Price Index also saw a rise, indicating persistent inflationary pressures in the economy.
Japan’s Ministry of Finance and Currency Intervention
Investors are speculating that Japan’s Ministry of Finance might intervene in the forex market to strengthen the Japanese Yen. Movements in the currency market have prompted the Japanese Finance Minister to indicate monitoring with urgency. The Japanese currency remains weak amid uncertainties about potential interest rate hikes under the new Prime Minister.
The heat map shows the Japanese Yen as the strongest against the Australian Dollar. On the currency exchange, JPY gained 0.33% against AUD, displaying the Yen’s pull against major currencies. Other explanations include the roles of quantitative easing and tightening on the currency’s value.
Economic indicators and inflation impact forecasts for both currencies, with the RBA using various tools to manage economic stability and currency value.
RBA’s Cautious Stance Amidst Inflation
We are seeing selling pressure on the AUD/JPY cross after the Reserve Bank of Australia held its interest rate steady at 3.6% today, November 4th, 2025. This decision was widely expected, as the RBA remains concerned about persistent inflationary pressures in the economy. The pair has subsequently declined to near the 100.40 level.
The RBA’s cautious stance is justified by the latest inflation figures we have seen. Australia’s monthly CPI indicator for October 2025 showed a 3.4% year-over-year increase, which remains stubbornly above the central bank’s 2-3% target range. With inflation proving difficult to tame, any future rate cuts seem distant, but the current pause is taking the upward momentum out of the Australian dollar.
On the other side of the pair, the Japanese Yen is gaining strength from the growing possibility of government intervention in the currency markets. We have seen USD/JPY hovering near the 155 level, a key psychological line that has historically prompted Japanese officials to act. We remember the significant interventions of late 2022, when the Ministry of Finance spent over ¥9 trillion to support the yen, making the current verbal warnings more credible.
For derivative traders, this environment suggests positioning for potential further downside in AUD/JPY over the coming weeks. Buying put options on the pair would be a straightforward way to profit from a continued decline while keeping risk clearly defined. The increased chatter about intervention will also likely drive up implied volatility, making the pricing of these options a critical factor to watch.
