On recent days, Yen appreciated 30 bps towards USD "after the Central Bank lowered its interest rates by 50 bps". Can someone explain me the economic rationale of the appreciation after a central bank lowered rates?

Sorry if this is not the right place to ask.

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    $\begingroup$ A lot has been going on. On March 3 the Fed cut rates by 50bps, on March 15 the Fed cut by a further 100 bps. USDJPY appreciated from 108.298 on March 2 to 110.694 on March 19. You are right that this goes against the rule of thumb that lower interest rates decrease the value of the currency. It just shows that this "rule" does not always work (especially for USD) and other factors (perhaps the role of the USD as a "safe haven currency" or a need for dollars by banks outside the US) are playing a role. Complex events are occurring quickly and we can only guess what is going on. Humbly yours. $\endgroup$ – noob2 Mar 20 '20 at 13:11
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    $\begingroup$ As @noob2 has pointed out, recent US dollar moves seem to be driven primarely by a shortage of US funding. This is because the coronavirus crisis has brought to a halt international supply chains, especially in East Asia, thereby payments along the supply chain cease and liquidity becomes scarce. As a very large proportion of international trade finance is carried out in dollars, companies are rushing in to get dollar liquidity in order to be able to pay debts/payables. These dynamics currently seem to be dominating any other factor which might influence USD FX rates. $\endgroup$ – Daneel Olivaw Mar 20 '20 at 15:29

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