The Japanese currency, the yen, experienced a significant drop to 155.01 per dollar before recovering to 160.17 amidst rumors of intervention by authorities. This marks the lowest exchange rate against the US dollar since April 1990, leading to speculation that Japanese officials may step in to support the currency, a move not seen since late 2022.
During a volatile trading day, the yen plummeted to historic lows, prompting concerns about its stability. Traders speculated on potential government intervention as the yen made a dramatic recovery later in the day, indicating possible actions taken by authorities to prevent further depreciation.
Japanese officials have remained silent on whether they intervened in the currency market, but their readiness to intervene has raised alarms about the country’s economic stability. The Bank of Japan’s continued maintenance of ultra-low interest rates has contributed to the weakening position of the yen in recent years.
The impact of a weak yen has been mixed; while it has benefited Japanese exporters, it has put pressure on household budgets due to increased prices of imported goods. Despite authorities’ readiness to intervene to stabilize the exchange rate, they have refrained from doing so during the yen’s ongoing decline.
Governor Kazuo Ueda emphasized that any significant impact on the economy or prices due to yen fluctuations would be a key factor in adjusting monetary policy accordingly. The recent decision by the Bank of Japan to maintain its benchmark rate at 0 to 0.1 percent reflects its cautious approach to monetary policy amidst exchange-rate volatility.
