Dollar/Japanese yen exchange rate fell from 34-year high


Lerato Khumalo

The dollar/yen parity, where the Japanese yen lost value against the dollar for 7 business days in a row and approached the peak of the last 34 years, declined, albeit limitedly, after the “intervention” rhetoric.

Exchange rate continues to occupy the financial agenda in Japan.

The dollar/yen parity, which carried its upward trend to the seventh consecutive trading day as of Friday, is currently at 159.50, 0.1 percent below the previous closing.

While the dollar/yen parity rose above 160 at the beginning of May for the first time since June 1986, it fell to 151.86 levels due to the increasing sales pressure from this level.

While it seems that the movements in the country’s currency have mobilized the Japanese authorities, analysts state that approximately 60 billion dollars of reserves may have been sold after the 160.17 level seen on April 29.

Analysts noted that concerns that the volatility in the dollar/yen parity negatively affects the Japanese economy and reduces predictability have come to the fore.

Analysts stated that the Japanese yen, which has been declining against the dollar for a while, supported the profits of Japanese export companies and caused the share prices of many Japanese companies to reach record levels, while it put non-export-oriented Japanese companies in a difficult situation regarding costs.

Analysts stated that this situation prompted Japanese authorities to take action.

Accordingly, Masato Kanda, Deputy Minister of Finance for International Relations in Japan, stated that they are ready to intervene to support the Japanese yen 24 hours a day, if necessary.

Kanda emphasized that the developments in the exchange rate negatively affect the national economy and said, “In case of excessive volatility in the exchange rate due to speculative reasons, we will make the necessary intervention.” made his assessment.

The Bank of Japan (BoJ) increased interest rates for the first time in 17 years in March, but did not change the amount of bond purchases.