RELATED PRESS / MAY 8
The screen shows symptoms of the exchange rate between the U. S. yen and the Japanese yen at a currency trading ground in Seoul, South Korea.
The yen fell to its lowest level in 33 years, as the wide yield differential with the United States continues to weigh on the Japanese currency.
Wednesday closed down 0. 2% at 150. 25, consistent with the dollar, its lowest point since August 1990. The move increases the threat of intervention by Tokyo authorities, who have continually said they will not rule out any measures to curb excessive movements. .
“There’s obviously a lot at stake,” said Bipan Rai, global head of FX strategy at CIBC in Toronto. “We are now above the dollar-yen level” at which Japan last intervened, he said.
Japan spent a record 6. 3 trillion yen ($42 billion) in October 2022 to prop up its currency as it weakened beyond that level.
The yen rose above 150 on Monday but temporarily recovered under the weight of options-related dollar promotion and algorithmic trading tips. On Oct. 3, it touched 150. 16 before a sharp reversal that fueled the hypothesis that Japan had entered the market.
“It looks like some stops are being triggered on the dollar against the yen to push it above the Oct. 3 highs,” said Win Thin, head of FX strategy at Brown Brothers Harriman.
Officials did not show or deny whether they had subsidized the currency on the 3rd. The country’s most sensible foreign exchange official, Masato Kanda, has since said that Japan will take appropriate action if excessive movements in currency markets are noticed; It is desirable for the currency to move in a solid manner, reflecting the fundamentals.
Meanwhile, the 10-year U. S. Treasury note rose nearly 14 core issues to 4. 96% from 0. 85% for its Japanese counterpart. This gap helps keep the pressure on the yen.
However, speculation about the yen’s fall will put pressure on the Bank of Japan to tighten its financial policy, and a possible escalation of the conflict in the Middle East that would increase demand for safe havens also triggers investors to remain cautious.
Nikkei reported over the weekend that BoJ officials were mulling over the possibility of replacing the yield curve program as long-term domestic interest rates rise in tandem with U. S. rates. He did not say where he was given the information.
“Basically, a program like the yield curve is confusing and there are few smart features the longer you let it run,” CIBC’s Bipan said.
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