The Japanese yen fell to its worst level against the dollar since 1990 on Wednesday, reaching the zone that prompted Tokyo to intervene two years ago, Reuters and CNBC reported.
The dollar briefly rose to 151.97 yen in Asian financial markets on Tuesday, but later fell 0.12 percent against the Japanese currency.
Japanese authorities stepped in in 2022 to protect the yen when it hit 151.94 to the dollar, and Tokyo Finance Minister Shunichi Suzuki has now said Japan will take “strong measures” against currency fluctuations.
Japan’s finance ministry said on Wednesday it would hold talks with the central bank of Tokyo and the Financial Services Agency and announce the results after the meetings are completed.
The yen rose slightly after the announcement.
Japan’s national currency has depreciated by more than 7% this year, partly due to the divergence in US and Japanese government bond yields. The Bank of Japan cut its key interest rate from negative last Tuesday, but raising it to 0.1% did not help the yen.
The yen is under the “burden” of a strong dollar
“The market is very sensitive to the 152 zone,” Rodrigo Catril, an analyst at National Australia Bank, said of the dollar-yen exchange rate. “If it goes above that level, recent history shows that intervention will be much more likely,” he added.
The U.S. dollar is on track for a fourth straight quarter of gains amid expectations that the Federal Reserve, the central bank in Washington, will finally cut interest rates and better-than-expected results for the U.S. economy last year.
Guy Miller, chief strategist at Zurich Insurance Group, said currencies were suffering from the “burden” of a strong dollar, including the Chinese yuan, which ended the last trading session at its weakest since November 2023.
“The US economy has fared much better than most expected, especially compared to other parts of the world. Investors who may have been betting against the dollar have likely closed out some of those positions, which has helped support the dollar in recent weeks,” adds Miller.
Source: Hot News
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