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Wednesday, February 1, 2023

Japanese yen slips to 24-year low against US$

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

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,” Suzuki told a press conference.

At midday Friday in Asia, the yen continued to slip, trading around 140.35 against the dollar, a BBC report said.

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 report added.

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

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, the BBC report explained.

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 too slid by around 5 per cent for the first time since October 2016, the BBC added. The South Korean won also touched a 13 year low against the green back recently.

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.

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