The Japanese yen has hit its lowest level since 1990. This significant drop in the yen’s value marks a notable point in Japan’s economic landscape,
reflecting various domestic and international financial dynamics,
including policy decisions by the Bank of Japan and global market trends.

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Decrease in the value of the yen

Japan’s negative interest rates

Decrease in the value of the Yen.

The Japanese yen has reached its lowest level since 1990, falling against the U.S. dollar to a 34-year low.
This has increased speculation about Japan intensifying its efforts to slow the currency’s decline.
The yen fell 0.3% against the dollar, surpassing the 151.95 level reached in October 2022,
a point that previously prompted intervention from Japan’s currency officials
who have issued stern warnings to foreign exchange speculators in recent months.

Masato Kanda, Japan’s Vice Finance Minister for International Affairs,
stated in a press release that the current yen depreciation does not
align with economic fundamentals and is speculation-driven.
He emphasised that Japan would take necessary measures against excessive market volatility,
leaving all options on the table.

Japan’s negative interest rates

Regarding Japan’s negative interest rates, investors anticipate that the interest rate
differentials between Japan and other advanced economies, especially the United States,
will remain significant even though the Bank of Japan has moved away from negative interest rates.
Until this policy shift, the Bank of Japan was the last institution globally maintaining sub-zero interest rates,
a factor that constrained the yen’s appreciation as investors sought higher yields from other currencies.

Bank of Japan Governor Kazuo Ueda has reiterated that the bank’s accommodative monetary policy will continue for now.
His comments further highlight the widening gap between Japan’s interest rates and those in the United States.
Following the Bank of Japan’s historic decision to abandon negative interest rates
on March 19, 62% of 47 analysts in a survey expected another interest rate
hike by the central bank by next October.
However, there was a variance in opinions regarding the timing of this move.

In 2022, Japan spent over 9 trillion yen ($59.3 billion) on three market interventions in September and October
to support the yen, with the first intervention occurring when the yen was significantly stronger than its current value.

The Japanese yen has hit its lowest level since 1990

The Japanese yen has hit its lowest level since 1990

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