Japanese Yen Hits 34-Year Low Against US Dollar: Will Authorities Intervene to Stabilize Currency?

The Japanese currency, the yen, has recently fallen to its lowest level against the United States dollar in 34 years, reaching 160.17 per dollar. This has raised concerns that Japanese authorities may need to intervene to stabilize the currency.

The decline in the yen can be attributed to a number of factors. One of the main reasons is the Bank of Japan’s decision to keep interest rates at ultra-low levels while other central banks, including the US Federal Reserve, have raised borrowing costs. Despite a recent increase in interest rates by the BOJ – the first in 17 years – the downward trend has persisted, particularly as expectations of rate cuts in the US have diminished due to higher-than-expected inflation.

A weaker yen has benefited Japanese exporters and boosted tourism revenue, but it has also led to higher prices for imported goods, putting pressure on household budgets. Japanese officials have indicated their readiness to intervene in the foreign exchange market to prevent excessive fluctuations in the yen’s value, although they have refrained from doing so during its year-long decline.

Last Friday, the Bank of Japan maintained its benchmark interest rate at 0-0.1 percent. BOJ Governor Kazuo Ueda emphasized that exchange-rate volatility would only impact monetary policy if it significantly affected the economy and prices. He noted that if