The weakening of the Japanese yen against the U.S. dollar to 160 is significant, marking its lowest level since April 1990. This decline is attributed to several factors, including the sustained strength of the U.S. dollar and the delay in Federal Reserve rate cuts, which contrasts with the Bank of Japan’s decision to end its negative interest rate policy in March. The yen has been trading around 150 or weaker against the dollar since then.
Despite concerns about the impact of exchange rate volatility on the economy, the Bank of Japan Governor Kazuo Ueda indicated in a press conference that monetary policy adjustments would only be considered if the yen’s movements significantly affect economic conditions and prices. While Japanese authorities have cautioned against “excessive” yen movements, they have not announced any official measures to support the currency. Some observers had anticipated intervention around the 155 level, but the yen continued to weaken beyond that point.
