Buzz Update The yen fell to a 20-year low against the dollar TOU

Buzz Update The yen fell to a 20-year low against the dollar


The yen fell to a 20-year low against the dollar

TOKYO – The yen hit a two-decade low against the dollar on Wednesday, widening recent falls as the gap between Japan’s ultra-loose monetary policy and US tightening widened.

Although traditionally considered a safe currency, the uncertainty created by the war in Ukraine did not strengthen the yen.

Instead, analysts say the US Federal Reserve is moving towards a more aggressive policy and the shock of rising oil prices in Japan – a major importer of fossil fuels – has weakened the currency.

The dollar bought 126 yen on Wednesday afternoon, the lowest level since 2002.

‘The Japanese yen is one of the weakest currencies in the world this year,’ the Dutch banking group ING said in a recent comment.

‘The Hawkish Federal Reserve driving the rally is a definite storm of the Dowish Bank of Japan. [BoJ]And the negative terms of Japan’s trade shock as a major fossil fuel importer. ‘

Government spokesman Hirokazu Matsuno said, “Stable exchange rates are important and we see rapid currency movements as undesirable.”

“We urgently monitor the trends in the foreign currency market and their impact on the Japanese economy,” he said.

The yen has already lost 10% of its value against the dollar in 2021 after a four-year steady strengthening.

The US Federal Reserve has begun a path of aggressive tightening of the dollar against the US central bank by increasing yields.

But its moves are contrary to the Bank of Japan’s ultra-loose monetary policy, which is currently being maintained, Bank Governor Haruhiko Kuroda said earlier on Wednesday.

“Given the economic and price situation, the Bank of Japan is striving to achieve its two per cent inflation target … by sustaining its current strong monetary easing,” he said.

Swiss bank UBS said the weaker yen would hurt domestic-based small businesses, which face the purchasing power of Japanese homes and higher import costs.

‘The government is providing financial assistance and expanding support for the most part. We think that [yen] Purchasing intervention is possible if the depreciation rate is considered too fast, ”it said in a note.

Tohru Sasaki, head of Japan’s market research at JPMorgan Chase Bank, told AFP that the Bank of Japan should “do anything to slow the yen depreciation”.

‘The Japanese government can sell foreign reserves [USD] It’s politically difficult to intervene, ” he said, adding that it would be “strange” for the finance ministry to do so while the Bank of Japan continues its current easing policies.

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