ALBAWABA - With regard to the US dollar, the Japanese yen has dropped to its lowest point since 1986, warning speculators that government intervention in support of the faltering currency may once again be necessary, as reported by Financial Times.
The yen slid 0.6% vs the dollar on Wednesday to ¥160.65, surpassing the level it hit in late April prior to Japan's finance ministry spending a record ¥9.8 trillion ($62 billion) to strengthen the currency.
A monetary policy divergence between the US Federal Reserve and the Bank of Japan (BoJ) has caused the yen to fall 13.8% so far this year, according to Anadolu Agency. The BoJ met projections by keeping interest rates constant at its June meeting, although traders were taken aback since no timetable for cutting its purchases was provided.
The Bank of Japan became the final major central bank to abandon the negative interest rate stance in March, raising rates for the first time in 17 years, from 0% to 0.1 percent. This move caused a sell-off that caused the Yen to weaken versus other major currencies.
Japanese authorities said they don't protect the currency at a certain level and would intervene after significant drops. Analysts beliebe the BOJ may delay intervention until after French elections and US statistics, Financial Times notes, which may bolster the yen if the global economy slows.
