Source: AFP
The yen hit a 34-year low against the dollar on Wednesday, just over a week after the Bank of Japan announced a long-awaited interest rate hike in a shift from years of too-loose monetary policy.
The unit weakened to 151.97 per dollar, the lowest since 1990, before recovering to around 151.72.
The drop came after a top central bank official suggested it would continue to pursue an accommodative policy for now, echoing earlier BoJ comments.
But soon after, the finance minister said the authorities would not hesitate to “take decisive action against excessive” currency movements — raising speculation of government intervention to support the currency.
Over the past two years the yen has weakened sharply from levels around 115 to the dollar, before Russia’s invasion of Ukraine.
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While central banks around the world raised interest rates aggressively to tackle rising inflation, the Bank of Japan stuck to its ultra-loose policies, depressing the yen.
This was good news for exporters but not for consumers as it made imports more expensive.
Last week the bank finally took a step away from its unorthodox monetary stimulus program — raising interest rates for the first time since 2007.
However, the yen has continued to weaken since then.
Wednesday’s drop came after Naoki Tamura, a member of the BoJ’s governing board, reportedly told business leaders in northern Japan that “slow but steady progress” was needed to scale back the central bank’s long-standing ultra-easy policy.
He repeated a line from a policy statement by the bank about economic conditions remaining accommodative for now, prompting fresh falls in the yen, Bloomberg News reported.
![](https://images.yen.com.gh/images/77607bed859f0d4a.jpg?impolicy=cropped-image&imwidth=256)
![](https://images.yen.com.gh/images/77607bed859f0d4a.jpg?impolicy=cropped-image&imwidth=256)
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After the currency hit a 34-year low, Finance Minister Shunichi Suzuki said the government was closely monitoring the situation.
“We are watching market movements with a great sense of urgency. We will take decisive action against excessive movements, without ruling out any option,” he told reporters.
The government last intervened in markets to support the yen in October 2022, and on Monday a Treasury currency diplomat also hinted that it could be on the cards again.
ING said in its morning note on Wednesday that currency markets will “test the verbal intervention of the past few days to see if there is more substance than mere words.”
Royal Bank of Canada’s Alvin Tan added that “intervention concerns” had masked the yen’s slide.
However, risks of further devaluation remain thanks to factors such as “the yen’s significant yield disadvantage,” he said.
Source: AFP