(London) Weakened by accommodating Japanese monetary policy, the yen reached a new low since 1986 against the dollar, fueling speculation about new intervention by the authorities to support their currency.
Around 7:45 a.m. EST, the Japanese currency lost 0.37% against the greenback, to 160.30 yen per dollar, shortly after hitting 160.39 yen, a low against the greenback since December 1986.
The yen also fell by 0.10% against the single European currency, to 171.28 yen per euro.
By once again crossing the level of 160 yen per dollar to fall even lower, the Japanese currency is evolving at levels similar to those which had generated Tokyo’s previous interventions on the foreign exchange market.
The Japanese authorities had acted, according to observers, the first time on April 29 when the dollar reached 160.17 yen, the lowest against the dollar since 1990, then again on May 2.
At the end of May, the Finance Ministry revealed that Japan had released around $62 billion between the end of April and the end of May to support its currency.
At this point, “it is possible that traders will try to push the yen down in order to test the resolve of the Japanese authorities,” said David Morrison, an analyst at Trade Nation.
The Japanese currency is very weakened by the accommodative monetary policy of the Bank of Japan (BoJ), which only ended in March the negative rates it had been practicing since 2016, unlike other central banks which are raising theirs. for two years in the face of inflation.
For its part, the greenback also progressed against the single currency which lost 0.27% to 1.0685 dollars.
On Tuesday in London, Federal Reserve (Fed) Governor Michelle Bowman, quoted in the Financial Times, said she remained “willing to raise” rates again “if progress on inflation stops or even was reversing” in the United States, that is, whether prices stagnate or accelerate again.
These remarks “reflect the debate within the Fed on whether the (American) central bank can begin to reduce interest rates this year, or even before the presidential election in November,” noted John Plassard , analyst at Mirabaud.
In this context, the next inflation data on Friday will be particularly scrutinized by the market.
