The Japanese Yen Surpasses 143 Yen per Dollar... Exchange Rate Expected to Rise to 147 Yen

Dollar Index Surpasses 110, Highest in 20 Years

[Image source=Yonhap News]

[Asia Economy Reporter Lee Ji-eun] The value of the US dollar reached its highest level in 20 years as US economic indicators exceeded market expectations. Meanwhile, the dollar-yen exchange rate surpassed the 143 yen mark, continuing the depreciation trend of the yen due to the strong dollar.

According to Bloomberg on the 6th (local time), the dollar index, which shows the value of the dollar against six major currencies, rose to 110.514 at one point during the trading session.

Major foreign media reported that the dollar index rose as the August ISM Non-Manufacturing Purchasing Managers' Index (PMI) released that day recorded 56.9, exceeding market expectations. The Non-Manufacturing PMI is a leading indicator of the US service sector economy, and a strong reading increases the likelihood that the US Federal Reserve (Fed) will intensify monetary tightening. Accordingly, the yield on the US 30-year Treasury bond reached 3.50%, the highest level in eight years since June 2014.

On the other hand, the yen's value fell to the 143 yen level, marking its lowest point in 24 years. Currently, in the Tokyo foreign exchange market, the yen is trading at 143.25 per dollar, having reached as high as 143.34 during the session. The yen-dollar exchange rate has been hitting new highs daily since surpassing the 140 yen level on the 1st.

The yen's drop to the 143 yen level is analyzed to be due to the interest rate gap between US and Japanese government bonds widening to more than 3 percentage points, fueling dollar buying.

Additionally, the Reserve Bank of Australia (RBA), which had been pursuing a dovish monetary policy like Japan, raised its benchmark interest rate, which also appears to have influenced the yen's depreciation. On this day, the RBA raised its benchmark rate by 0.5 percentage points. Furthermore, with expectations that the Bank of Canada (BOC) and the European Central Bank (ECB) will also raise their benchmark rates, the possibility of further yen depreciation is increasing.

Some forecasts suggest that the yen could fall to around 147 yen per dollar. Benjamin Schattil, an analyst at JP Morgan, said, "There is a gap in trade barriers against the yen," and added, "We do not rule out the possibility of the yen falling to around 147 yen."

Paul McKell, an investment strategist at HSBC, predicted, "The yen-dollar exchange rate will remain above 140 yen for the next few months and then fall to the 130 yen range in the second half of next year," adding that if the Bank of Japan maintains its accommodative policy, the dollar-yen exchange rate will peak in the coming months.

This content was produced with the assistance of AI translation services.