Japanese yen weakens to 160 against the U.S. dollar for the first time since 1990

The


Japanese
yen
weakened
to
160
against
the
U.S.
dollar
in
Monday
morning
trading
in
Asia.

The
yen
briefly
touched
160.03
against
the
dollar,
the
weakest
level
since
April
1990
when
it
touched
160.15,
according
to
FactSet
data.

The
currency
has
languished
alongside
continued
strength
in
the
greenback
as
Federal
Reserve
rate
cut
expectations
get
pushed
back.
The
Fed’s
preferred
inflation
gauge
came
in
slightly

hotter
than
expected
on
Friday,
underlining
the

difficulty
the
U.S.
central
bank
faces
in
tackling
sticky
inflation.

The
yen
has
traded
around
150
or
weaker
against
the
dollar
since
the
Bank
of
Japan

ended
its
negative
interest
rate
regime
in
March.
On
Friday,
the
central
bank

held
rates
and
slightly
raised
its
inflation
expectations
for
fiscal
2024.

In
a
press
conference
Friday,
BOJ
Governor
Kazuo
Ueda
said
exchange
rate
volatility
would
only
affect
monetary
policy
if
there
was
a
“significant”
impact
on
the
economy,
according
to
a
Reuters
translation
of
his
remarks.

“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,
according
to
a
Reuters
translation.

Japanese
authorities
have
repeatedly

warned
against
“excessive”
moves
in
the
yen,
but
have
made
no
official
announcements
about
bolstering
the
currency.
Some
market
watchers
had
suspected
authorities
would
intervene
at
the
155
level,
but
the
yen
slid

past
that
mark
last
week.

Vincent
Chung,
associate
portfolio
manager
for
T.
Rowe
Price’s
diversified
income
bond
strategy,
noted
that
officials
seem
more
focused
on
volatility
in
the
currency,
rather
than
specific
levels.

“The
current
pace
of
depreciation
is
less
than
in
2022
so
the
intervention
response
could
be
less
intense,”
Chung
said,
noting
option
pricing
suggests
markets
predict
intervention
could
come
after
the
BOJ’s
May
meeting.

Other
experts
have
made
similar
remarks,
telling
CNBC
there
is
no
magical
“line
in
the
sand”
for
yen
intervention.
Last
week,
Frederic
Neumann,
HSBC’s
chief
Asia
economist
and
co-head
of
global
research
in
Asia,
said
the
more
important
thing
is
to
monitor
how
the
yen
weakens.

If
the
yen
sees
a
“steady
depreciation,”
the
economist
said
there
might
not
be
much
resistance
from
Japanese
authorities.

Jesper
Koll,
expert
director
at
investment
advisory
firm
Monex
Group,
predicted
Japanese
officials
would
take
action
if
the
yen
moves
more
than
3-5
yen
in
12
hours,
namely,
when
it
sustains
a
genuine
speculative
attack.

Speaking
shortly
after
the
yen
hit
160
on
Monday,
Koll
said
any
intervention
“will
be
a
waste
of
Japan’s
national
assets”
as
the
country
sells
its
U.S.
dollars
to
buy
yen.
Koll
said
the
yen
could
further
weaken
to
200-220
against
the
greenback,
if
nothing
fundamentally
changes.

For
speculators,
Koll
said
intervention
is
“free
liquidity”
and
will
remain
as
such
unless
the
Fed
signals
that
rate
cuts
are
back
on
the
table,
thereby
weakening
the
U.S.
dollar,
or
if
Ueda
signals
that
domestic
demand-pull
inflation
must
be
contained.

Still,
T.
Rowe
Price’s
Chung
said
yen
weakness
has
“positively
impacted
stock
performance,
encouraged
corporations
to
raise
wages,
and
moved
the
country
closer
to
the
Bank
of
Japan
(BoJ)’s
inflation
target
of
2%.”

Japanese
markets
are
closed
Monday
for
a
public
holiday.