The Japanese yen rises after its lowest level in 34 years

Japan – The Japanese currency rose significantly yesterday, Monday, against the dollar, after its lowest level in 34 years.

The exchange rate of the Japanese currency improved, recording 155.05 yen to the dollar, after recording 160.17 yen to the dollar in morning trading in Asia, its lowest level since 1990, which raised speculation about possible intervention by the Japanese authorities to support its currency, for the first time since the year 2022.

This came after a new rise in inflation in the United States led to the fading of expectations for a reduction in US interest rates this year.

According to the personal consumption expenditures index on which the US Federal Reserve relies, inflation rose in March in the United States, which prompts the US central bank to wait before starting to lower interest rates.

Prior to that, the Bank of Japan chose to maintain the current monetary situation during its meeting on Friday, which caused the yen to decline in light of the Japanese government also not intervening in the trading market to support its currency.

The Japanese authorities have announced several times that they are ready to intervene in the event of uncontrolled movements in the exchange rate, referring to “speculation” as a “big problem.”

The Bank of Japan had ended the negative interest rate policy, which it was the last to adopt in the world until last month, by raising the main interest rate for the first time in 27 years.

After decades of deflation and monetary stability, inflation is expected to be around 2 percent this year (excluding fresh produce) in Japan.

The Bank of Japan had been an exception for a long time, adopting an ultra-loose policy while other central banks increased interest rates to combat accelerating inflation, causing a huge gap that pushed investors into other currencies.

“It appears that markets are trying to push the dollar/yen to 160 in the absence of official intervention,” said Vishnu Varathan, of Mizuho Bank.

Source: “AFP”