1,000 yen, 5,000 yen and 10,000 yen banknotes are lined up in Kyoto, Japan, Thursday, November 2, 2023. Japan is trying to protect the yen while slowing the pace of rising bond yields, with tensions between currency and debt increasingly evident in the market. Photograph: Kentaro Takahashi/Bloomberg via Getty Images
Kentaro Takahashi | Bloomberg | Getty Images
The yen hit a 34-year low on Wednesday, falling as low as 151.97 against the U.S. dollar, raising questions about possible government intervention to support the yen.
The yen was last trading at 151.22 against the dollar at 10:19 a.m. London time, after recouping some losses.
The yen hit a record low at the end of last year, falling to 151.95 against the U.S. dollar in October 2023.
yen
The yen’s weakness suggests to many investors that Japanese policymakers may step in to strengthen the troubled currency. Japanese Finance Minister Shunichi Suzuki said that measures “to deal with disorderly fluctuations in foreign exchange” are not impossible.
According to Reuters, after the Bank of Japan held a meeting with the Ministry of Finance and the Financial Services Agency, Masato Kanda, the deputy finance minister for international affairs, said that the trend of the yen is being watched closely and urgently.
He added that fluctuations as high as 4% in the last two weeks were not considered mild changes.
Kanda pointed out that Bank of Japan officials have stated that if developments in the foreign exchange market affect the Japanese economy, the central bank will respond through monetary policy measures.
Japan’s economy unexpectedly fell into a technical recession at the end of 2023 after shrinking for two consecutive quarters. After decades of dealing with deflation, the country now faces a new battle against inflation. The Bank of Japan made a historic decision earlier this month to end its negative interest rate policy path and abolish its yield curve control policy, triggering a sell-off in the yen.
Kanda has previously said that there are pros and cons to a weaker yen. For example, currency weakness has boosted the travel industry and led to stronger stock market performance.
This is a developing story, please check back for updates.
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