Yen's buying power sinks to 53-year low after decades of stagnation
The yen's weakness against major currencies is driving up import costs in Japan, leading to higher prices for necessities like energy and food.
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Posted 8/29/2023, 4:36:00 PM
nikkei.com
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Japan will only intervene in the currency market if the yen drops below 150 to the dollar and becomes a major political issue for Prime Minister Fumio Kishida, according to a former central bank official involved in Japan's past market interventions.
The weakening of the U.S. dollar could benefit companies that export products and services, while importers may have to pay more for the goods they bring in, leading them to hold off on purchases. However, a more stable dollar can benefit both importers and exporters.
The dollar is hesitant as traders wait for economic data, while the yen struggles near levels that resulted in intervention last year.
Japanese Finance Minister Shunichi Suzuki suggests that currencies should be determined by the market, with no indication of intervening to support the weakening yen, despite concerns over rising import costs.
Tokyo stocks rise as a cheaper yen supports the market, despite falls on Wall Street and concerns about another US Federal Reserve interest rate hike.
The Japanese yen has reached a 10-month low against the US dollar, while the euro and sterling remain near three-month lows, as investors show confidence in the US economy despite global growth concerns.
Asian currencies, including the Japanese yen and the Singapore dollar, are trading against the US dollar with varied movements, while the year-to-date percentage changes for the currencies show fluctuations.
The decline in Chinese imports into the U.S. is impacting steel prices and raising concerns about sourcing steel and other metals.
The Japanese yen strengthens against the US dollar as Bank of Japan Governor Kazuo Ueda hints at a potential shift away from negative interest rates.
Big Japanese manufacturers and the services sector in Japan are experiencing a decline in confidence, with concerns of a slowdown in China's economy affecting global and domestic growth, according to a Reuters poll. The weak sentiment in the business sector raises doubts about the ability of exports to drive economic recovery amid weak domestic demand. Many companies cited high input costs and weak demand as contributing factors, along with geopolitical risks and tensions between the US and China.
The Japanese yen remains weak against the U.S. dollar due to high U.S. Treasury yields and anticipation of the Bank of Japan maintaining its current monetary policies, while the dollar is boosted by the prospect of higher U.S. interest rates.
The yen's purchasing power has reached a historic low as it continues to depreciate against the dollar and other currencies, leading to higher travel and import costs for Japanese.