The Japanese Yen Hits Lowest Value in 6 Years and 1 Month... Over 120 Yen per Dollar

An employee at the KEB Hana Bank Counterfeit Response Center is organizing Japanese yen. Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Donghoon Jeong] The value of the Japanese yen hit its lowest point in 6 years and 1 month.

On the 22nd, the yen exchange rate rose to the 120-yen level per dollar, marking the highest level since February 2016.

As the Bank of Japan, Japan's central bank, continues large-scale monetary easing, the yen weakened amid the U.S. Federal Reserve (Fed) reducing its monetary easing.

Jerome Powell, Chair of the Fed, emphasized that the Fed must "act swiftly" to curb high inflation from the previous day, even suggesting the possibility of a 'big step' of raising the benchmark interest rate by 0.5 percentage points at once if necessary.

Expectations of a widening interest rate gap between the U.S. and Japan strengthened the trend of selling yen and buying dollars in the Tokyo foreign exchange market that day, leading to further yen weakness.

Local media forecast that the Bank of Japan is effectively tolerating yen weakness, indicating the possibility of the yen-dollar exchange rate rising further. Haruhiko Kuroda, Governor of the Bank of Japan, said after the monetary policy meeting on the 18th, "The basic structure where a weaker yen overall pushes up both the economy and prices, acting as a plus for the Japanese economy, remains unchanged."

After the monetary policy meeting, the Bank of Japan announced it would keep the short-term interest rate at -0.1%, and continue large-scale monetary easing by purchasing long-term government bonds without limit to guide the 10-year government bond yield, a long-term interest rate indicator, to around 0%.

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