The Yen Hits Lowest Level Since 1990
Yen Intervention by Japanese Authorities
The yen plummeted to its lowest level since 1990 on Wednesday, reaching a point that prompted Japanese authorities to intervene back in 2022. The finance minister issued a warning, stating that Japan would take “decisive steps” against any excessive currency movements.
Dollar Strength Against Yen
During the Asia session, the dollar briefly surged to 151.97 yen, its highest point against the yen since the mid-1990s, before declining to 151.42. This decrease led Japanese authorities to defend the yen at 151.94, echoing the actions taken in 2022. Finance minister Shunichi Suzuki reiterated the country’s stance, signaling potential intervention against drastic currency fluctuations.
Market Reactions and Expectations
Following the announcement, the finance ministry disclosed plans for discussions with the Bank of Japan and the Financial Services Agency. This move slightly boosted the yen. The currency has experienced a 7% decline this year due to the significant difference in U.S. and Japanese bond yields, unaffected by the recent small interest rate hike by the Bank of Japan.
Global Economic Trends
Investors are closely monitoring U.S. core inflation data scheduled for Good Friday. A notable increase in U.S. durable goods orders has already bolstered the dollar, impacting the yen further. The strong performance of the U.S. economy, compared to other regions, has led to a reevaluation of interest rate cut expectations, resulting in quarterly gains for the dollar.
Global Currency Movements
Various currencies, including the euro and sterling, have shown stability amidst the dollar’s strength. The Swedish crown and Swiss franc have also experienced fluctuations, with the Swiss currency still recovering from a recent rate cut. The market remains attentive to central bank decisions and economic indicators influencing currency values.
