The yen at its lowest for 20 years against the dollar, the euro also weakens

Around 8:40 p.m., the yen plunged 1.83% to 130.83 yen, having crossed the threshold of 130 yen to the dollar for the first time since April 2002.

The dollar was king on Thursday, as the yen hit a new 20-year low and the euro weakened further against a greenback holding its role as a safe haven in a market shaken by the Covid-19 recovery in China and by Ukraine.

Around 6:40 p.m. GMT, the yen plunged 1.83% to 130.83 yen, having crossed the threshold of 130 yen to the dollar for the first time since April 2002.

The euro for its part yielded 0.45% to 1.0509 dollars, after having fallen below the threshold of 1.05 dollars, a first since the beginning of 2017.

“We are witnessing a hell of a run for the yen”, down 12% against the greenback since the start of the year and 5% for the month of April alone, indicated Shaun Osborne of Scotiabank.

“The Bank of Japan is sticking to its ultra-loose monetary policy after its meeting on Thursday and they have adjusted their bond purchases to ensure that yields are going to stay at 0.25% at most,” explained the. foreign exchange analyst.

“It gave the green light to the market to sell the yen even more,” summarized Michael Hewson, analyst at CMC Markets.

In addition, the Japanese central bank reiterated its promise to continue buying these assets daily indefinitely.

“And the BoJ governor hasn’t expressed concern about the weakness of the yen, so between the ultra-loose monetary policy and the lack of concern about the level of the currency, it’s a very negative combination. for the Japanese currency, Mr. Osborne added.

On the side of the European Central Bank, a first rate hike is possible this summer, said the president of the monetary institute Christine Lagarde.

But, at the same time, market players expect a European embargo on Russian oil, “which will be harmful for European growth” and therefore the euro, tempered the Scotiabank analyst.

The risk caused by a possible stoppage of Russian gas deliveries to the European Union is weighing on the appetite for the single currency.

“The response of European leaders to Russia’s demand for ruble payments for its gas will likely dictate whether the euro reaches parity with the dollar in the coming weeks,” said Jeffrey Halley, an analyst at Oanda.

“It is difficult to exclude that we will achieve parity in the coming weeks” especially if there is an expansion of the war in Ukraine, further noted Shaun Osborne.

“Parity is just a number, but psychologically from the European point of view, it is also a question of prestige,” he added.

“The geopolitical risk around Russia and Ukraine, as well as concerns about confinements in China are pushing investors towards the dollar, a safe haven”, commented for their part the analysts of OFX.

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