World News

Japanese yen slips to 24-year low against dollar

todaySeptember 2, 2022 5

Background
share close

By Annabelle Liang

Business reporter

A person counts Japanese 10,000 yen banknotes.Image source, Getty Images

The Japanese yen has declined to its lowest level against the US dollar since August 1998, prompting the government to weigh action.

The boost in the dollar stems from data suggesting the labour market of the world’s biggest economy is recovering.

On Thursday, the currency pair breached the key psychological level of 140 yen against the US dollar.

While many central banks in Asia have hiked the cost of borrowing to mirror the US, Japan has not followed suit.

The Bank of Japan has maintained its ultra-low interest rates to support economic recovery, and this is one of the reasons the yen has fallen in value against the US dollar and other major currencies.

Higher interest rates tend to attract foreign investment. That increases demand for and the value of currencies from countries with higher interest rates.

A US Labor Department report on Thursday showed that the number of Americans filing new claims for unemployment benefits fell to a two-month low, suggesting the jobs market is recovering post-pandemic.

This sparked buying interest in the US dollar which drove it to a fresh high against the Japanese currency, at 140.23 yen.

But it was not the only currency affected by dollar strength.

The British pound slid by around 5% for the first time since October 2016.

The US dollar gained momentum earlier in the week, after Federal Reserve chairman Jerome Powell said the US central bank would continue to raise interest rates in the coming months.

Mr Powell added that the Fed could keep rates high “for some time” at an annual conference in Jackson Hole, Wyoming.

“It’s a strong USD story this week after the hawkish Jackson Hole forum”, Philip Wee, senior currency economist at DBS Bank, told the BBC.

“From here, more Asian central banks are ready to hike, some larger than usual. This should help offset some of the pressures from the strong USD,” he added.

Japan reacts

On Friday, Japanese Finance Minister Shunichi Suzuki said the government would take “appropriate” action to address the yen’s decline.

“Excessive, disorderly currency moves could have a negative impact on the economy and financial conditions,” Mr Suzuki told a press conference.

However, Dwyfor Evans of State Street Global Markets told the BBC that measures to lift the yen “could prove futile” because of the gap between interest rates in Japan and much of the rest of the world.

The Bank of Japan last intervened in currency markets in 2011, after an earthquake and tsunami triggered the Fukushima nuclear crisis.

At midday Friday in Asia, the yen has continued to slip, trading around 140.35 against the dollar.

You may also be interested in:

Media caption,

Japan election: Why the ruling party keeps winning

Written by: admin

Rate it

Previous post

karnataka:-leopard-on-the-loose-puts-india-state-in-a-spot

World News

Karnataka: Leopard on the loose puts India state in a spot

By Cherylann MollanBBC News, MumbaiImage source, Karnataka Forest DepartmentImage caption, The leopard has been photographed with a camera trapAn operation to catch an elusive leopard has been under way in the southern Indian state of Karnataka for more than 27 days.The animal first made headlines on 5 August when it attacked a labourer in the densely populated Belgaum city in northern Karnataka. The man was injured but survived the attack.Since […]

todaySeptember 2, 2022 5


0%