In recent trading sessions, the Japanese currency, the yen, experienced a significant drop to 160.17 per dollar before recovering to 155.01 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.
Despite concerns about its stability, the volatile trading day saw the yen plummet to historic lows. As traders speculated on potential government intervention, the yen made a dramatic recovery later in the day, indicating possible actions taken by authorities to prevent further depreciation.
The Bank of Japan’s continued maintenance of ultra-low interest rates has contributed to the yen’s weakening position in recent years. However, Japanese officials remained silent on whether they had intervened in the currency market. The impact of the weak yen has been mixed, benefiting Japanese exporters but putting 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.
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 amid exchange-rate volatility. 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.