Japanese Yen Weakens to 160 Against the U.S. Dollar for the First Time Since 1990

Japanese Yen Weakens to 160 Against the U.S. Dollar for the First Time Since 1990

The Japanese yen experienced significant volatility in trading today, weakening to 160 against the U.S. dollar for the first time since April 1990. Here are the key points:

Historic Milestone:

The yen briefly touched 160.03 against the dollar, marking the weakest level since 1990 when it reached 160.15. This sharp decline comes after a prolonged period of trading around 150 or weaker against the dollar since the Bank of Japan ended its negative interest rate regime in March.

Market Intervention:

While Japanese authorities have repeatedly warned against “excessive” moves in the yen, there have been no official announcements about bolstering the currency. Analysts are closely monitoring this development. While some market watchers had suspected authorities would intervene at the 155 level. The yen slid past that mark last week. Japan’s Ministry of Finance is expected to publish its market intervention statistics for the period from March 28 to April 26. However, no official announcements regarding currency bolstering have been made.

Skittish Markets and Thin Liquidity:

The current yen volatility may reflect market skittishness amid thin liquidity. Japanese officials are unlikely to provide comments today due to the holiday in Japan.

Pain Threshold at 160:

Analysts suggest that the 160 yen per dollar level represents a new line in the sand for Japanese authorities. A weaker yen benefits Japanese exporters. But poses challenges for policymakers due to increased import costs and inflationary pressures.

Fed Rate Cut Expectations:

The yen’s weakness has been influenced by continued strength in the U.S. dollar. Expectations for Federal Reserve rate cuts have been pushed back, and the recent inflation data has added to the challenge faced by the U.S. central bank in addressing sticky inflation.

“Today’s JPY volatility may reflect market skittishness amid thin liquidity. Japanese officials are unlikely to comment today due to the holiday.”

Focus on Volatility:

Officials seem more concerned about currency volatility rather than specific exchange rate levels. The pace of depreciation is currently less intense than in 2022. which could impact the intensity of any intervention response.

As of midday, the yen has strengthened slightly to trade around 156.5 against the dollar.