Office workers look at an electronic stock board display in Tokyo on March 9, 2020. The yen fell to a 34-year low against the dollar on Wednesday. File Photo by Keizo Mori/UPI |
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March 27 (UPI) -- The Japanese yen tumbled to its lowest mark against the U.S. dollar since 1990 on Wednesday, temporarily sliding to the 151.97-per-dollar level as investors continued to sell the country's currency.
The yen, which has struggled against the dollar for years, appeared to be affected by concerns over a relaxed monetary environment as investors purchased more dollars in response. Before trading ended, the yen regained some of its ground to lift it beyond the 34-year low.
"Given there is a precedent and the fall to 34-year lows, it was inevitable for the market to be cautious about a possible intervention," Takuya Kanda, senior researcher at the Gaitame.com Research Institute, said, according to Kyodo News.
While Japan's Finance Minister Shunichi Suzuki promised to take "decisive action" against the growing weakness of the yen, it did little to calm fears among investors who worried about a prolonged shrinkage of the yen. His comments suggested that the government may purchase yen itself to prop up the current for the first time since October 2022.
Japan ended its negative interest rate policy on March 19, which was something it used to fight deflation. The country has used that financial tool since 2007.
Nomura Securities said analysts predict a dollar-yen exchange rate of from 149 and 153 to the dollar.
"If expectations for an additional rate hike in July rise, there could be upward pressures on the Japanese yet," a securities report said, according to Nikkei Asia.
In the meantime, Japan's central bank, the Bank of Japan, continues to face pressure to respond to improve the yen's standing.
"While the BOJ have both rate hikes and quantitative tightening as policy tightening tools, quantitative tightening could be a better tool," the bank wrote.
