Yen Falls to Near 2-Year Low, Erasing Gains from Recent Intervention

The Japanese yen plummeted to its lowest point against the U.S. dollar in almost two years on Thursday, reaching the upper limit of 160 yen per dollar. This significant drop negates the effects of the Japanese authorities' intervention efforts in April, as the U.S. dollar continued its appreciation.

The yen traded at 160.79 units per dollar in the early morning and was selling at 160.67 yen at the Tokyo Stock Exchange opening. This depreciation is largely driven by market expectations that the U.S. Federal Reserve will increase interest rates in the coming months. The Fed maintained its rates on Wednesday, keeping them between 3.5% and 3.75%, while also releasing its quarterly economic projections.

“

Our intention is to take appropriate measures at any time, as necessary.

These recent market movements have erased the gains the yen made following the currency market interventions by Prime Minister Sanae Takaichi's government and the Bank of Japan between April and May. These stabilization operations amounted to 11.73 trillion yen (approximately 63 billion euros), according to the Japanese Ministry of Finance. The intervention had previously strengthened the yen from 160 units per dollar to 155 in early May.

Despite the Bank of Japan's decision to raise its short-term interest rates to 1% yesterday, the highest in over three decades, in an effort to control inflation risks from rising oil prices and the weak yen, the currency continues to weaken. Analysts suggest that this rate hike was widely anticipated by the market and is unlikely to have a significant impact on the yen's value. "Our intention is to take appropriate measures at any time, as necessary," stated government spokesperson Minoru Kihara, adding that authorities will "closely monitor the evolution of financial and capital markets, including the exchange rate."

“

closely monitor the evolution of financial and capital markets, including the exchange rate.