Japanese Yen Hits Multi-Decade Low Against USD

Japanese Yen Hits Multi-Decade Low Against USD

April 24, 2024 : The Japanese Yen (JPY) has depreciated to its weakest position in several decades relative to the US Dollar (USD). This development was reported on April 24th, 2024, with the JPY currently hovering around the psychologically significant level of 155.00 JPY per USD.

Several factors are contributing to the decline of JPY. One key element is the contrasting monetary policies of the Bank of Japan (BoJ) and the US Federal Reserve. The BoJ has maintained an accommodative stance, keeping interest rates low to stimulate economic growth. In contrast, the Federal Reserve has signaled its intention to raise interest rates to curb inflation. This divergence in policy creates a more attractive investment environment for the USD, drawing capital away from the JPY.

Another contributing factor is the recent improvement in global risk sentiment. Easing geopolitical tensions and signs of economic recovery have encouraged investors to seek riskier assets. This shift weakens the JPY, traditionally viewed as a safe-haven currency in times of uncertainty.

The psychological level of 155.00 JPY per USD is being closely monitored by market participants. A sustained breach of this level could trigger further depreciation for the JPY, potentially prompting intervention by Japanese authorities. In the past, Japan has intervened in the foreign exchange market to support the JPY, but the effectiveness of such actions in the current environment remains uncertain.

The JPY depreciation presents challenges and opportunities for the Japanese economy. On the one hand, it can make Japanese exports more competitive in the global marketplace. However, it also increases import costs, putting upward pressure on inflation. The BoJ will likely carefully monitor the situation and may need to adjust its policy stance if the JPY’s decline becomes unsustainable.