In the New York foreign exchange market on the 3rd, there was significant turmoil in the yen exchange rate. The dollar/yen rate temporarily reached 1 dollar = over 150 yen, marking a level of yen depreciation and dollar strength not seen in about a year.
This sudden yen depreciation trend is a result of the market’s perception that, in contrast to the Bank of Japan’s extensive monetary easing measures, the Federal Reserve (FRB) in the United States is continuing its monetary tightening policies.
Efforts by high-ranking Japanese government officials to discourage yen depreciation have proven ineffective, and the rapid decline of the yen continues.
This has raised concerns about high prices and the potential for an acceleration of import price increases.
Toshio Suzuki, Japan’s Minister of Finance, expressed his intention to respond appropriately while maintaining a high level of vigilance.
Currency intervention will be considered based on the magnitude of fluctuations in the yen exchange rate, and the focus remains on whether the government and the Bank of Japan will intervene in the foreign exchange market for the first time since October of last year.
■ Dollar/Yen’s Rollercoaster Ride
Around 11 PM Japan time, the dollar/yen rate temporarily broke through the 150 yen mark, only to sharply reverse and fall back to the 147 yen range.
Market movements have been turbulent, with the rate even reaching the 149 yen range.
As of 10:30 AM New York time (11:30 PM Japan time), the rate is 1 dollar = 149 yen and 11 to 21 sen, showing a 70-sen yen appreciation against the dollar.
The dollar/yen rate had surged to 150 yen and 16 sen before experiencing a sharp decline, marking a yen depreciation and dollar strengthening trend not seen since October of the previous year.
■ Euro/Yen and Pound/Yen Also Plummet
In addition to this drastic fluctuation, the exchange rates of other currencies like euro/yen and pound/yen have been significantly affected.
Euro/yen experienced a sharp decline despite hints from the ECB economist regarding additional interest rate hikes, as it was pressured by rising US interest rates. Pound/yen also surged before plummeting, revealing the market’s instability.
■ Conclusion
The market is now closely watching whether the Japanese government and the Bank of Japan will intervene in the yen exchange rate.
However, the uncertain direction of the US economic indicators and the Federal Reserve’s interest rate policies are also expected to have a significant impact on the foreign exchange market.
Labor market resilience and the movement of interest rates will be key factors in the future forex market, and market participants are facing a high level of uncertainty.
In summary, economic indicators and the Federal Reserve’s interest rate policies are likely to have a significant impact on the forex market going forward.
This is due to unexpected increases in August JOLT job openings and the impact of expectations of additional FRB rate hikes on the market.
Attention should be paid to interest rate movements and government currency interventions while monitoring the market.
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