Japanese 1,000 yen, 5,000 yen and 10,000 yen banknotes arranged in Kyoto, Japan, on Thursday, Nov. 2, 2023. The contradictions in Japan’s efforts to protect the yen while slowing the pace of rising bond yields are becoming increasingly clear in currency and debt markets. Photographer: Kentaro Takahashi/Bloomberg via Getty Images
Kentaro Takahashi| Bloomberg | Getty Images
The Yen hit a 34-year-low on Wednesday, weakening as much as 151.97 against the U.S. dollar and fueling market questions over potential government intervention to prop the Japanese currency.
The Yen was last at 151.22 against the dollar at 10:19 a.m. London time after paring back some losses.
The Japanese currency struck its previous record low at the tail end of last year, when it declined to 151.95 against the dollar in October 2023.
The currency’s weakness has indicated to many investors that Japanese policymakers could step in to strengthen the besieged currency. Japan’s finance minister Shunichi Suzuki has indicated that measures to “respond to disorderly FX moves” were not off the table.
Following a meeting of the Bank of Japan with the finance ministry and the Financial Services Agency, Masato Kanda , the vice finance minister for international affairs, said that the Yen’s moves were being watched closely and urgently, Reuters reported.
Recent fluctuations, which have been as large as 4% within two weeks, were not considered to be mild changes, he added.
BOJ officials have said that, if foreign exchange market developments were to affect Japan’s economy, the central bank would respond through monetary policy measures, Kanda noted.
Japan’s economy unexpectedly fell into a technical recession at the end of 2023, after contracting for two consecutive quarters. The country now faces a new struggle of combating inflation, after decades of addressing deflation. In a historic decision, the Bank of Japan earlier this month ended its policy course of negative interest rates and abolished its yield curve control policy, which sparked a sell-off of the Yen.
Kanda has previously said that there are pros and cons to a feebler Yen. The currency’s weakness has, for example boosted tourism, and led to stronger stock market performance.
This is a developing story, please check back for updates.