Japanese yen surges after sinking to lowest level against dollar since 1990

Japanese Yen: Japanese currency sinks to 160.17 per dollar before rising to 155.01 amid speculation of intervention by authorities.

• Currency jumps on speculation authorities may have intervened
• Earlier in Asia trading, yen fell as much as 1.2% to 160.17

Japanese Yen

The Japanese yen has swung wildly in trading after sinking to a 34-year low against the United States dollar.

The yen on Monday sank to 160.17 per dollar, the lowest since April 1990, setting off murmurs that Japanese authorities could intervene to prop up the currency for the first time since late 2022.

The Japanese currency surged to 155.01 later in the day, prompting speculation among traders that authorities had bought up the currency to stem the slide.

Officials in Japan, which is marking a public holiday, did not confirm an intervention by authorities.

The yen has been on a near continual slide since early 2021 as the Bank of Japan (BOJ) has maintained ultra-low interest rates while the US Federal Reserve and other central banks have hiked borrowing costs.

downward spiral has continued in recent weeks despite the BOJ raising interest rates last month for the first time in 17 years as expectations of interest rate cuts in the US fade amid above-target inflation.

While the weak yen has helped Japanese exporters boost profits and put more cash in the pockets of tourists visiting Japan, it has put pressure on household budgets by raising the prices of imported goods.

Japanese officials have repeatedly stated that they are prepared to step in to prevent sharp movements in the exchange rate although authorities have refrained from intervening during the currency’s yearlong slide.

Daily Digest Market Movers: Japanese Yen holds gains despite Japan Kanda didn’t comment on probable intervention

• The Japanese Yen rebounds swiftly after an initial slump to a nearly 40-year low against its American counterpart on Monday amid a possible intervention by Japanese authorities to support the domestic currency. 
• That said, a big divergence in the Bank of Japan’s policy outlook and hawkish Federal Reserve expectations, along with a positive risk tone, should keep a lid on any further appreciating move for the safe-haven JPY. 
• As was widely anticipated, the BoJ left its short-term interest rates unchanged on Friday and indicated that inflation was on track to hit the 2% target in coming years, suggesting its readiness to hike borrowing costs later this year.
• Moreover, the Tokyo Consumer Price Index released on Friday indicated that inflation in Japan is cooling, which, along with a generally positive tone around the equity markets, should cap any meaningful upside for the safe-haven JPY.
• Japan’s ruling Liberal Democratic Party lost three key by-election seats, which is not seen as a vote of confidence in Prime Minister Fumio Kishida and argued against him being reappointed at the end of the term in September. 
• The US Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) Price Index rose 0.3% in March, while the yearly rate climbed to 2.7% from 2.5% in February, beating estimates for a reading of 2.6%.
• Adding to this, the core PCE Price Index, which excludes volatile food and energy prices, held steady at the 2.8% YoY rate as compared to 2.6% anticipated, reaffirming bets that the Federal Reserve will keep rates higher for longer.

On Friday, the Japanese central bank kept its benchmark rate unchanged at 0 to 0.1 percent.

BOJ Governor Kazuo Ueda said at a news conference that exchange-rate volatility would affect monetary policy only if there were a significant impact on the economy.

“If yen moves have an effect on the economy and prices, that is hard to ignore. It could be a reason to adjust policy,” Ueda said.

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