The Japanese currency, the yen, experienced a significant drop to 160.17 per dollar before recovering to 155.01 amidst rumors of intervention by authorities. This marks the lowest exchange rate against the US dollar since April 1990, leading to speculation that Japanese officials may step in to support the currency, a move not seen since late 2022.
The volatile trading day saw the yen plummet to historic lows, prompting concerns about the currency’s stability. As traders speculated on potential government intervention, the yen made a dramatic recovery later in the day, indicating possible actions taken by authorities to prevent further depreciation. Despite Japanese officials remaining silent on whether they had intervened in the currency market, recent downward trends have raised alarms about its weak position in recent years.
The Bank of Japan’s continued maintenance of ultra-low interest rates has contributed to this trend. In contrast to other central banks’ rate hikes, this has put pressure on household budgets due to increased prices of imported goods and benefited Japanese exporters. Despite authorities’ readiness to intervene and stabilize the exchange rate, they have refrained from doing so during the ongoing decline of yen.
Governor Kazuo Ueda emphasized that any significant impact on the economy or prices due to yen fluctuations would be a key factor in adjusting monetary policy accordingly at their recent decision to maintain benchmark rate at 0% -0.1%.