Japan’s yen currency has fallen to a 38-year low against the U.S. dollar, according to LSEG market data.
The last time the yen was this low was in December 1986. The currency has struggled throughout 2024 and continues to weaken vis-à-vis the greenback.
Accelerating the yen’s decline has been the Bank of Japan’s decision to end its negative interest rate policy and eliminate its yield curve control policy.
Following those moves, the yen’s value has declined precipitously, requiring Japan’s finance ministry to intervene and prop-up the currency in April and May of this year.
In all, Japan’s central bank bout $62.25 billion U.S. worth of yen to stop the currency’s slide.
Analysts expect the yen to continue declining in coming months as the interest rate differential between the U.S. and Japan remains wide.
The benchmark U.S. federal funds interest rate currently sits in a range of 5.25% to 5.50%, while the Bank of Japan’s benchmark interest rate is at 0% to 0.1%.
Rising bond yields in Japan or an interest rate cut in the U.S. are needed to reverse the yen’s weakness, say analysts.
In recent days, Japan appointed Atsushi Mimura as its new “currency diplomat,” replacing the previous currency head Masato Kanda.
