As the value of the Japanese yen hit a new low, touching the 155 yen per dollar level for the first time in 34 years, the possibility of Japanese policy authorities intervening in the foreign exchange market has increased.
According to Bloomberg on the 24th (local time), the price of the yen per dollar fell to 155.17 yen in the London foreign exchange market during the day, breaking the psychological Maginot line of ‘155 yen per dollar’ for the first time since June 1990. Since then, the value of the yen has reversed some of the decline and is trading around 154.9 yen.
The price of the yen per dollar was around 140 yen as of January 2 of this year, but has shown a steep decline since then. The decisive factor was that expectations of the Federal Reserve’s interest rate cut this year were set back due to the US’s strong real economy and stronger-than-expected inflation.
As concerns grew about the prolonged high inflation and high interest rates in the United States, the widening interest rate gap between the United States and Japan also affected the decline in the value of the yen.
On this day, Japan’s NHK reported, “The perception that the U.S. economy is solid is spreading, and as expectations of an early interest rate cut are receding, the movement to sell yen and buy dollars is becoming stronger in the foreign exchange market, conscious of the difference in interest rates between the U.S. and Japan.” did.
The yen price, which had been hovering around 140 yen per dollar at the beginning of the year, fell to the 154 yen per dollar range early this month as the U.S. Consumer Price Index (CPI) exceeded expectations every day in the first quarter of this year.
As the yen continues to weaken day after day, the Japanese government and the Bank of Japan have verbally intervened, suggesting the possibility of intervening in the foreign exchange market, but the weak yen phenomenon has still not subsided. Bank of Japan Governor Kazuo Ueda mentioned raising the base rate in a question-and-answer session at the National Assembly on the 23rd, saying, “If the inflation trend rises to the 2% range in line with the forecast, we will adjust the degree of monetary easing, which means raising short-term interest rates.” On the same day, Finance Minister Shunichi Suzuki also hinted at the possibility of intervention in a press conference held after the cabinet meeting, saying, “We are watching with high tension and will respond appropriately while communicating closely with the relevant authorities.” However, market participants are expecting interest rates to be frozen ahead of the Bank of Japan base rate decision scheduled for the 26th. On the 23rd, Bloomberg reported, “Almost all market participants expect interest rates to be frozen, and most expect Japan’s benchmark interest rate to move in October.”
[안갑성 기자]
Tags: Yen price lowest years .. Intraday Maginot line yen opened
