(New York = Yonhap Infomax) Reporter Jeong Seon-young = The dollar-yen exchange rate broke above the 157 yen level during the day, breaking another high in 34 years.
Dollar-Yen Exchange Rate GraphYonhap Infomax
According to Yonhap Infomax’s current price by currency (screen number 6416) as of 3:36 pm on the 26th (US Eastern time), the dollar-yen exchange rate reached a high of 157.78 yen at one point during the day.
This is the highest level for 34 years since May 1990.
The dollar-yen exchange rate was above the 150 yen level on March 19 and then above the 157 yen level in just one month.
When the dollar-yen exchange rate went above 153 yen, warning of real intervention began in earnest, but the 154 yen level, 155 yen level, and 156 yen level passed in order without much resistance.
Although Japanese foreign exchange authorities have made verbal statements about intervention in the US dollar, there are currently no visible signs of actual intervention.
This surge in the dollar-yen exchange rate is most likely a result of the recent widening gap in monetary policy between the United States and Japan.
In order to change the direction of the exchange rate by selling dollars on a large scale, fundamental factors must be supported, but the current situation is not very favorable for the Japanese foreign exchange authorities.
Even the monetary policy of the Bank of Japan continued to encourage the weakening of the yen.
The BOJ froze the base interest rate in its monetary policy decision the previous day and indicated that it would continue its easing stance.
Governor Kazuo Ueda’s comments added strength to the yen’s weakness against the dollar.
Governor Ueda reiterated his policy to maintain monetary easing conditions for the time being and made comments that were tolerant of the weakening yen.
He said, “The purpose of monetary policy is not to directly control the exchange rate,” and “the possibility of the Yen being weak for a long time may not be zero.”
The dollar-yen exchange rate rose sharply, reflecting the strength of the dollar along with the Bank of Japan’s (BOJ) statement that it was tolerating the weakening yen.
As the US personal consumption expenditure (PCE) price index in March also came out solid, it became more difficult for the US Federal Reserve to cut interest rates.
The financial market believed that the recent increase in the dollar-yen exchange rate had a significant fundamental impact.
Voices say that if the difference in economic conditions and pace of monetary policy between the United States and Japan widens in the future, it will be difficult to significantly change the structure of a weak yen and a strong dollar.
In other words, even if we immediately intervene to sell dollars to prevent the dollar-yen exchange rate from rising, it is difficult to go against the big wave.
In addition, as the Bank of Japan shows no intention of accelerating the increase in interest rates, the flow of money between the two countries appears to be strengthening further.
Kelvin Wong, economist at Oanda, said, “Japan’s core inflation of 1.8% in April represents the slowest increase since September 2022, and is below the BOJ’s 2% inflation target, which could delay the Bank of England’s interest rate hike Japan. ” He said.
syjung@yna.co.kr
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This article was published at 04:54 on the Infomax financial information terminal.
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