The yen-dollar exchange rate reached its highest level in 34 years as the expected timing for the U.S. interest rate cut, anticipated in June, was postponed.
According to the New York foreign exchange market on the 10th (local time), the yen-dollar exchange rate surpassed 153 yen per dollar during the session. It even rose to 153.24 yen at one point. This is the highest level since June 1990.
This was influenced by the U.S. March Consumer Price Index (CPI) increase rate of 3.5%, exceeding the market expectation of 3.4%. The March U.S. CPI increase rate announced that day was the highest in six months since September last year (3.7%). More than half of experts evaluate that the U.S. Federal Reserve (Fed) will be able to cut interest rates only by September.
The Nihon Keizai Shimbun (Nikkei) analyzed, "The expectation that the Fed would lower interest rates early has diminished, leading to a decline in the yen's value." It means that as the interest rate gap between the U.S. and Japan is likely to remain without narrowing for the time being, there has been a strong movement to sell yen and buy dollars.
With the Bank of Japan (BOJ), Japan's central bank, ending its negative interest rate policy last month, the BOJ's stance to maintain low interest rates for the time being is also contributing to the yen's weakness.
NHK reported that there is also a sense of caution that Japanese authorities might intervene in the market by buying yen and selling dollars.
The market views the yen-dollar exchange rate margin line for intervention by the Japanese Ministry of Finance in the foreign exchange market at 152 yen. Japanese Finance Minister Suzuki Shunichi said on the 9th, "We will not exclude any means and will respond appropriately to excessive movements."
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