The Japanese yen fell to a 20-year low against the US dollar
The Japanese currency fell below its previous low of 126.3 on Wednesday, marking the weakest level since May 2002, as overnight increases in US Treasury yields have led market players’ safe haven to offload Japanese currency.
As the Fed begins to tighten its policy to tackle inflation, the BOJ has based its ultra-loose monetary easing policy position on a number of hikes this year. By the bank’s overall Dowish attitude.
In general, Japanese major exporters encourage weaker yen because it increases price competition in foreign markets and boosts profits when repatriated at favorable exchange rates.
However, market analysts say the recent rise in energy and commodity prices that resource-poor Japan must import is hurting companies’ balance sheets due to the yen’s weakness, which weighs heavily on consumer spending.
Japanese Finance Minister Shunichi Suzuki told a news conference on Friday that the devaluation of the yen would be “bad” if material prices were not fully accepted and wage increases were not enough.
On Wednesday, Japan’s top government spokesman Chief Cabinet Secretary Hirokazu Matsuno said such “rapid currency movements were undesirable” when the yen had previously sunk compared to its US counterpart.
Matsuno “monitors the developments in the Japanese currency market, including the recent depreciation of the yen and their impact on the economy.”