Japanese Yen Falls to 161 Yen per Dollar, Lowest in 37.5 Years

On the evening of the 26th, around 6:30 PM, the value of the Japanese yen fell to 160 yen per dollar, reaching its lowest level since December 1986, about 37 and a half years ago. As of 10:00 AM on the 28th, it had further depreciated to the 161 yen per dollar range. This decline is attributed to the growing concerns about the possibility of intervention by the Japanese government and the Bank of Japan (BOJ), leading to the continued weakening of the yen.

The recent decline in the value of the Japanese yen has been exacerbated by the widening gap between the US Federal Reserve's (Fed) interest rate hike stance and the Bank of Japan's accommodative monetary policy. While the US continues to raise interest rates to curb inflation, the Bank of Japan maintains a loose monetary policy to stimulate the economy. This policy divergence has widened the interest rate differential between Japan and the US, leading to a continuous decline in the yen's value.

Furthermore, uncertainties surrounding the US economy are also impacting the yen's weakness. Recent weak US economic indicators have fueled concerns about a potential recession, intensifying the safe-haven demand and contributing to the yen's decline.

US inflation-related data is scheduled to be released on the night of the 28th, and the yen's value is likely to experience significant volatility depending on the outcome. The market anticipates that if US inflation slows down, the pace of interest rate hikes could be reduced, potentially leading to a rebound in the yen's value. Conversely, if inflation continues, the likelihood of interest rate hikes will increase, potentially further driving down the yen's value. The future direction of the Japanese yen will depend on the outcome of the upcoming US inflation data release and the Bank of Japan's monetary policy stance, which warrants close attention.