The Japanese yen tumbled past 160 per dollar on Wednesday, surpassing its late April 2024 low that previously prompted sharp interventions from the Bank of Japan, which sold forex reserves to curb the yen’s volatility.
The yen, as tracked by the Invesco CurrencyShares Japanese Yen Trust (NYSE:FXY), has now fallen to its lowest level since December 1987 against the greenback, depreciating by a third of its value over the past three years, amid a persistent divergence in interest rates between the Bank of Japan and other major central banks, particularly the Fed.
At its June meeting, the Bank of Japan unanimously kept its key short-term interest rate at approximately 0% to 0.1%, as anticipated, following its first rate hike since 2007 and the conclusion of eight years of negative rates in March.
Moreover, the board suggested it might consider reducing its JPY 6 trillion per month bond purchases at its July meeting.
Japan spent $61.3 billion on currency intervention from late April to late May, a period likely involving two separate instances of intervention.
Last week, the U.S. Treasury Department added Japan to a foreign exchange “monitoring list,” a decision not attributed to Japan's interventions in April-May to support the yen but for meeting two of the three mechanical criteria for the list.
This chart shows a higher dollar-yen exchange rate, indicating the dollar strengthening against the yen.
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