Japan’s yen dips to 34-year low against US dollar

Currency markets saw Japan’s yen dip to its lowest point against the dollar in more than three decades on Wednesday. The fall has raised speculation that authorities might intervene in market trading to prop up the currency.

What’s happening with the yen?

The yen fell to 151.97 against the dollar — the lowest point since 1990 — before rallying slightly. The dollar was last down at 151.19.

In the past two years, the yen has weakened significantly from roughly 115 against the dollar before Russia’s invasion of Ukraine.

In a historic shift in monetary policy, Japan increased interest rates this month for the first time since 2007.

A weaker yen makes exports from Japan cheaper. However, it also drives up import costs and energy prices for consumers in the world’s fourth-largest economy.

In a sign of concern about the need to shore up the currency, the Bank of Japan, the Finance Ministry,

and Japan’s Financial Services Agency held a meeting late in Tokyo trading hours.

Meanwhile, the dollar is on track for solid quarterly gains after investors tempered their expectations of big interest rate cuts in light of strong economic data and the reluctance from central bankers.

Japan finance chief vows to respond if yen weakens excessively

Japan will respond “resolutely” to excessive weakness in the yen, Finance Minister Shunichi Suzuki said Wednesday, after the currency fell to a 34-year low against the US dollar despite the Bank of Japan’s first interest rate hike in 17 years last week, Kyodo News reported.

Suzuki told reporters that appropriate action would be taken “without excluding any options” to cope with excessive moves in the yen, driving speculation that the government may intervene in the currency market for the first time since late 2022.

Shunichi Suzuki also said Japan will be closely monitoring developments in the market with a “high sense of urgency.”

At a parliamentary session, meanwhile, Chief of the Bank of Japan (BOJ), Kazuo Ueda, said the central bank is “closely” watching the impact of the yen’s movements on the economy and prices, but declined to comment on currency market moves.

On 19th March, the BOJ scrapped its negative interest rate policy in its first rate hike since 2007, overhauling the central bank’s unorthodox monetary easing framework that had been implemented over the past decade to fight deflation.

The central bank, however, pledged to maintain monetary easing for now, prompting market participants to assume the interest rate gap between Japan and the United States is unlikely to shrink sharply.

Earlier in the day, BOJ board member Naoki Tamura said shortterm interest rates would remain near zero for the time being, while the market is expecting the US Federal Reserve to go ahead with three rate cuts this year.