The Japanese yen has declined to its lowest level against the US dollar since August 1998!
Today, the currency pair breached the resistance level of 140 yen against the US dollar.
Tweet on the latest from the currency market
Japanese yen slips to new low against dollar
The Japanese yen has declined to its lowest level against the US dollar since August '98!
— The_Journalbiz (@the_journalbiz) September 2, 2022
The currency pair breached the key psychological level of 140 yen against the US dollar.
While many central banks in Asia have hiked the cost of borrowing to mirror the US, Japan has not followed suit.
The Bank of Japan has maintained its ultra-low interest rates to support economic recovery, and this is one of the reasons the yen has fallen in value against the US dollar and other major currencies.
Higher interest rates tend to attract foreign investment. That increases demand for and the value of currencies from countries with higher interest rates.
- Pound also recorded the biggest monthly fall since 2016
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This sparked buying interest in the US dollar which drove it to a fresh high against the Japanese currency, at 140.23 yen.
But it was not the only currency affected by dollar strength.
The British pound slid by around 5% for the first time since October 2016.
The US dollar gained momentum earlier in the week, after Federal Reserve chairman Jerome Powell said the US central bank would continue to raise interest rates in the coming months.
On Friday, Japanese Finance Minister Shunichi Suzuki said the government would take “appropriate” action to address the yen’s decline.
The Bank of Japan last intervened in currency markets in 2011, after an earthquake and tsunami triggered the Fukushima nuclear crisis.
Today, yen has continued to slip, trading around 140.35 against the dollar.