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Japanese yen falls to recent 24-year low towards USD on Fed price hike woes

TOKYO, Sept. 1 (Xinhua) — The Japanese yen plunged to a recent 24-year low towards the U.S. dollar in Tokyo on Thursday, as remarks by a U.S. Federal Reserve official backing aggressive price hikes into subsequent yr stoked fears of a widening gulf in rates of interest between Japan and the United States.

The yen dropped to the higher 139 degree towards the dollar at one level Thursday, marking its lowest degree since September 1998.

The yen was offered for the U.S. dollar, analysts right here stated, following Cleveland Fed President Loretta Mester saying on Wednesday that the Fed ought to hike its key rate of interest to above 4 p.c by early subsequent yr.

The median market consensus for price hikes as a part of the Fed’s aggressive financial coverage to tame inflation that’s as much as 4 p.c, from present ranges of between 2.25-2.5 p.c, analysts defined.

Mester additionally remarking she doesn’t “anticipate the Fed cutting the Fed funds rate target next year,” echoed these of New York Federal Reserve Bank President John Williams not too long ago additionally backing aggressive hikes into subsequent yr, in stark distinction to the Bank of Japan’s (BOJ) coverage.

While the Fed and, most probably, the European Central Bank subsequent week, increase their charges to tame inflation, the BOJ has stayed dedicated to its ultra-loose financial coverage, setting its short-term benchmark rates of interest at minus 0.1 p.c, whereas persevering with to information 10-year Japanese authorities bond yields to round zero p.c.

The BOJ’s dovish coverage stance has seen rates of interest between Japan and the United States widen, which has triggered dollar shopping for and the yen’s weak spot, in addition to prompted volatility within the stock market right here, analysts have stated.

The yen’s speedy drop on Thursday as soon as once more sparked concern from the federal government right here which warned the depreciation of the yen and speedy actions of international alternate charges are “undesirable.”

“Currency rates should move stably, reflecting economic fundamentals. The government is watching foreign exchange market moves with a high sense of urgency,” Japan’s prime authorities spokesperson Chief Cabinet Secretary Hirokazu Matsuno advised a press convention.