Yen skidded in Asian trade on Friday to 38-year lows against the dollar, trading below 161 yen per dollar for the first time since 1986 and resuming losses despite warnings from Japanese authorities.
Yen is about to mark the second quarterly loss in a row against the dollar due to the stark interest rate differences between Japan and the US.
The Japanese government appointed a new forex diplomat on Friday as the yen continued to sustain heavy losses, raising expectations the Bank of Japan will intervene any time now.
The yen is also hurt by the surge in US 10-year treasury yields ahead of US personal spending data for May.
The Price
The USD/JPY pair rose 0.35% today to 161.28, the highest since 1986.
The yen rose 0.1% against the dollar on Thursday, the first profit in three days on limited short-covering after falling below 160 the day earlier.
Quarterly Trades
The yen is down 6.5% so far against the dollar this quarter, heading for the second quarterly loss in a row.
The losses are due to concerns about the large interest rate gap between Japan and the US, which continues to underpin the dollar’s standing.
Japan’s finance minister Shinuchi Suzuki issued another warning that authorities will take necessary measures in the forex market after yen hit a 38-year low against the dollar.
He said that the government aims to stabilize the exchange rate, and is concerned about the impact of volatility on the economy.
Will the BOJ Intervene Once More?
Data by the Japanese financial ministry showed authorities spent 9.79 trillion yen ($62.23 billion) to intervene in the forex market and support the yen.
The data confirmed the doubts that the Bank of Japan intervened in a two-stage process last month, selling up massive amounts of dollars in order to prop up the yen and snatch back from a 34-year low at 160.21.
It’s now a question whether the BOJ will intervene once more after the yen reached a new low of 160.78, the worst since 1986.
New Forex Diplomat
The Japanese government appointed a new forex diplomat the oversee the market as the yen sustains heavy losses against major rivals.
US Yields
US 10-year treasury yields rose 1% on Friday, resuming gains and almost touching two-week highs at 4.347%, underpinning the greenback.
The developments came ahead of important US personal spending data for May, which is considered the Fed’s favorite gauge for inflation.
The markets are pricing in a 64% chance of a Fed September interest rate cut, and a 76% chance of such a cut in November.
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
