The yen plummeted to a 34-year low: why it keeps falling and what the market fears

The yen plummeted to a 34-year low: why it keeps falling and what the market fears

The yen fell this Wednesday to its lowest level since 1990, before rebounding slightly after Japan’s top monetary policymakers met to discuss the rapidly weakening currency and suggested they were willing to intervene.

The dollar briefly rose to 151.97 yen, its highest level against the yen since the mid-1990s.but subsequently fell 0.19% to 151.29 yen.

He Bank of Japan, the Ministry of Finance and the Japan Financial Services Agency held a late-day meeting in Tokyo, after which the top foreign exchange official, Masato Kanda stated that “I will not rule out any measure to respond to disorderly movements.”

Japanese authorities intervened to defend the yen at 151.94 in 2022, and Finance Minister Shunichi Suzuki on Wednesday used the same words that preceded that move, warning that Japan would take “decisive measures” against excessive swings in the currency.

Yen collapse: market sees no long-term solution

“To some extent, they are swimming against the current. Intervention helps in the short term, but it is not a long-term solution,” said Bipan Rai, North American head of currency strategy at CIBC Capital Markets in Toronto.

The yen has plummeted more than 7% this year, dragged by the huge gap between US and Japanese bond yields, that the little one The Bank of Japan’s interest rate hike last week barely changed.

Meanwhile, the dollar is on track to close the quarter with gains, after investors lowered their expectations for big interest rate cuts amid strong economic data and central bank reluctance.

The dollar index gained 0.11% to 104.40, up 3% so far this year.

This week, the market’s attention will focus on the US core inflation due to be released on Good Friday, although a larger-than-expected rise in U.S. durable goods orders on Wednesday boosted the dollar somewhat, further weighing on the yen.

Guy Miller, chief market strategist at Zurich Insurance group, said: currencies were suffering under the weight of a strong US currency.

The euro fell 0.15%, to 1.0814 dollars, while the pound lost 0.07%, to $1.262.

Source: Ambito

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