Japan’s yen surges after sinking to lowest level against dollar since 1990

Japanese currency sinks to 160.17 per dollar before rising to 155.01 amid speculation of intervention by authorities.

The Japanese yen has been on a continual slide against the dollar since early 2021 [Yuriko Nakao/Reuters]

The Japanese yen has swung wildly in trading after sinking to a 34-year low against the United States dollar.

The yen on Monday sank to 160.17 per dollar, the lowest since April 1990, setting off murmurs that Japanese authorities could intervene to prop up the currency for the first time since late 2022.

The Japanese currency surged to 155.01 later in the day, prompting speculation among traders that authorities had bought up the currency to stem the slide.

Officials in Japan, which is marking a public holiday, did not confirm an intervention by authorities.

The yen has been on a near continual slide since early 2021 as the Bank of Japan (BOJ) has maintained ultra-low interest rates while the US Federal Reserve and other central banks have hiked borrowing costs.

The downward spiral has continued in recent weeks despite the BOJ raising interest rates last month for the first time in 17 years as expectations of interest rate cuts in the US fade amid above-target inflation.

While the weak yen has helped Japanese exporters boost profits and put more cash in the pockets of tourists visiting Japan, it has put pressure on household budgets by raising the prices of imported goods.

Japanese officials have repeatedly stated that they are prepared to step in to prevent sharp movements in the exchange rate although authorities have refrained from intervening during the currency’s yearlong slide.

On Friday, the Japanese central bank kept its benchmark rate unchanged at 0 to 0.1 percent.

BOJ Governor Kazuo Ueda said at a news conference that exchange-rate volatility would affect monetary policy only if there were a significant impact on the economy.

“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.

Source: Al Jazeera and news agencies