Reflecting Expectations for the End of Abenomics Amid Yen Weakness
Dollar Weakness Accentuated by Fed Average Inflation Targeting Implementation Effects
[Asia Economy New York=Correspondent Baek Jong-min] Following the announcement of Japanese Prime Minister Shinzo Abe's resignation, the value of the Japanese yen against the US dollar surged.
On the morning of the 28th (local time) in the New York foreign exchange market, the dollar-yen exchange rate fell by 1.27% from the previous day to 105.28 yen per dollar. This indicates that the dollar weakened against the yen.
Although the US dollar showed weakness against major currencies on this day, the yen's strength was particularly pronounced.
The dollar index, which shows the value of the dollar against major currencies, remained steady despite the Federal Reserve's introduction of an average inflation targeting system the previous day, but on this day it fell by 0.68% to 92.370. The euro-dollar exchange rate also only fell by 0.58%, highlighting the dollar's notable weakness against the yen.
The yen's strength is evident not only against the dollar but also against the British pound and the euro. The yen had recently shown weakness against the pound and euro, but turned strong immediately after the announcement of Prime Minister Abe's resignation. On this day, the yen's value rose by 0.54% against the euro.
This is interpreted as reflecting expectations of the end of Abe's economic policy, Abenomics. Abenomics is a policy based on a weak yen. The expectation that the yen will strengthen if Abenomics ends is the reason for this.
The yen's movement is clearly contrasted with the time of Prime Minister Abe's resignation in 2007. At that time, concerns over political instability caused the dollar-yen exchange rate to surge, meaning the yen weakened against the dollar.
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