Japanese yen hits 155 per dollar, weakest level since 1990

Japanese yen falls to 155 vs. USD, hits lows last seen in 1990 

On Wednesday, the Japanese yen plummeted to its lowest level against the U.S. dollar since 1990, as markets remained vigilant for any indication of intervention by Japanese authorities to support the currency. 

The dollar soared to a high of 155.17 yen, its strongest since 1990, before experiencing volatile trading around the 155 mark. It eventually stabilized at 154.90, marking a 0.05% increase. 

This sharp drop in the Japanese yen follows recent robust U.S. inflation data, which sent the dollar to five-month highs and reinforced expectations that the Federal Reserve is unlikely to be in a rush to cut interest rates this year.  

Some market participants are even pricing in the possibility of no cuts in 2024, as Fed Chair Jerome Powell recently indicated that the central bank may be returning — at least verbally — to its “higher for longer” stance on interest rates. 

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Speculation of yen intervention by Japanese government continues 

As the Japanese yen continues its descent, speculation about potential government intervention to support the currency has intensified. Japanese Finance Minister Shunichi Suzuki, along with other officials, have said they are watching currency moves closely and will respond as needed. 

The strength of the dollar was also a focal point at last week's International Monetary Fund / World Bank Spring meetings in Washington, where the United States, Japan, and South Korea issued a joint statement addressing the issue. 

Bank of Japan Governor Kazuo Ueda, speaking after the G20 finance leaders' meeting in Washington, noted that the central bank might consider raising interest rates again — it hiked rates for the first time in 17 years in March — if the yen’s declines push up inflation, highlighting the dilemma the weak currency presents for policymakers. 

The Bank of Japan is set to conclude its latest policy meeting on Friday. 

“Line in the sand” for yen intervention “keeps moving” 

Earlier in April, Hiroshi Watanabe, a former senior currency official, said that the likelihood of Tokyo stepping in to stabilize the Japanese yen remains low, unless its value falls significantly below 155 against the dollar. 

Japan last intervened to support the currency late last year, when USD/JPY declined to the 152 mark.  

In a morning note on Wednesday, Markets.com Chief Market Analyst Neil Wilson noted, citing multiple Japanese officials, that the so-called “line in the sand” for potential yen intervention may be moving: 

“Japan’s former currency chief Mitsuhiro said the country is very close to intervention if the yen falls more. One lawmaker, Takao Ochi, who is a senior member of the Lower House Financial Affairs Committee, suggested USD/JPY at 160 could provoke action – that line in the sand keeps moving”. 

Japanese yen forecast: Rabobank sees USD/JPY at 148 in 3-month view 

In a Japanese yen forecast issued on April 23, analysts at Rabobank shared their outlook for USD/JPY ahead of the Bank of Japan’s policy meeting: 

"It is our house view that the Fed is likely to kick off its rate cutting cycle in September. If U.S. economic data supports this view, the USD could start to edge lower in the summer which would likely allow the JPY to find some purchase against the USD. In the meantime, the [Ministry of Finance] will be hoping for an improvement in Japanese economic data to keep the JPY bears at bay. 

An upward revision to the BoJ’s CPI inflation forecast at this week’s policy meeting may afford a little protection to the JPY, though this would have more impact if policy-makers assess that domestically driven price pressures have risen." 

"In addition to its policy rates, the market will also be watching out for signs of any change in the BoJ’s bond buying programme. If the BoJ is judged by the market as lacking any hawkish signals, downside pressure in the JPY would likely increase suggesting more pressure on the MoF to put its money where its mouth is. Our 3 month USD/JPY 148 forecast assumes that the Fed will be laying the groundwork for a September rate cut during the summer." 

At the time of writing on April 24, the USD to JPY pair traded at 154.91 yen per dollar, with the greenback up 0.05% on the day. 

The U.S. dollar index (DXY), a gauge of the greenback’s strength in relation to six major peer currencies, was last up 0.17% at 105.85. The index is up close to 4.5% year-to-date. 

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