Why did the yen hit its lowest level against the dollar since 1986?

Question

Accepted Answer

The yen hit its lowest level against the dollar since 1986 due to Federal Reserve rate hike bets and reduced expectations for further Bank of Japan tightening.

The yen weakened to its weakest level against the dollar in decades because traders increased their bets on Federal Reserve hikes. At the same time, expectations for additional tightening by the Bank of Japan were fading, adding further pressure on the currency. The move came as the yen was already near four-decade lows, with traders also watching for signs of possible government intervention after a record US$72 billion was injected into markets to support the yen in May.
Fed hike bets pushed the yen lower
The yen’s fall was linked to rising expectations that the Federal Reserve would raise interest rates. In market terms, those “hike bets” tend to support the dollar versus the yen, helping explain why the dollar/yen rate moved higher as the yen hit a multi-decade low.
Bank of Japan tightening hopes waned
A second factor was waning hopes for further tightening by the Bank of Japan. With fewer expectations for the BoJ to tighten, the yen faced additional selling pressure, reinforcing the move to levels not seen since 1986.
Government support in May set the backdrop for intervention watch
Traders were also monitoring whether the government would step in again to support the yen. The government had already pumped a record US$72 billion into markets in May, and officials had warned they were willing to intervene again but had resisted so far.
Dollar/yen was trading around 162.70 yen in the session
In the same market context, the dollar/yen rate was reported at 162.70 yen around 0215 GMT, up from 162.59 yen on Tuesday. This level reflected the ongoing pressure that had driven the yen to its weakest point against the dollar since 1986.

Reading history

Hide →

This history is cleared when the page is closed.

Why did the yen hit its lowest level against the dollar since 1986?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

1

0

0

Share with friends