Mar 27 2024: On Wednesday, the Japanese yen reached its lowest level since 1990, entering the territory that led to intervention by Japanese authorities in 2022. This development prompted Japan’s finance minister to caution that the country would take “decisive steps” to address excessive currency movements.
The dollar briefly surged to 151.97 yen during the Asia session, marking its strongest level against the yen since mid-1990 before retracing to 151.42, down by 0.12%.
Japanese authorities previously intervened to support the yen when it reached 151.94 in 2022, and finance minister Shunichi Suzuki reiterated warnings against excessive currency moves on Wednesday, echoing the language used before the previous intervention.
The finance ministry announced talks with the Bank of Japan and the Financial Services Agency, scheduled for 0915 GMT on Wednesday, followed by a briefing for reporters. This announcement provided some support for the yen, which has depreciated by more than 7% this year due to the significant yield differential between U.S. and Japanese bonds, a trend unaffected by the Bank of Japan’s recent small interest rate hike.
Market analysts emphasized the sensitivity of the market around the 152 yen level, indicating that a breach of this level could increase the likelihood of intervention.
Meanwhile, the dollar is set for quarterly gains following adjustments in expectations for substantial interest rate cuts, supported by robust economic data and cautious statements from central bankers.
The market’s attention is focused on upcoming U.S. core inflation figures, with a stronger-than-expected increase in U.S. durable goods orders on Wednesday already boosting the dollar and exerting further pressure on the yen.
Other currencies showed mixed reactions, with the euro and sterling remaining relatively stable against the dollar. However, the Chinese yuan closed at its weakest level since November 2023.
The Swiss franc, although trading near its lowest level since November, remained flat on the day, affected by a recent surprise rate cut in Switzerland and a 7% decline in value since the beginning of the year.
