The yen today continued its devaluation trend against the dollar and stood at a new low since May 2002, an evolution that was once again branded as “undesirable” by the Japanese government in the context of global inflation. The greenback was bought this Tuesday in the Tokyo market in the upper-middle zone of 127 yen, which had not happened for almost two decades and maintains the sustained fall in the Japanese currency since the beginning of March.
The Japanese Minister of Finance, Shunichi Suzuki, reaffirmed the importance of “stability” in the foreign exchange market and pointed out that the Japanese authorities “will be in close communication with those of the US” to “respond appropriately”, in statements to the media before traveling to Washington to participate in the G20 meeting of industry leaders. In a previous intervention in the Finance Committee of the Japanese Parliament, Suzuki pointed out that the depreciation of the yen “is accelerating”, something that has “a positive aspect” for the Japanese economy but that can also lead to “a strong negative impact” for companies that have to bear the rising costs of imported products and raw materials.
The Japanese currency has been down for weeks in the context of the monetary easing policy applied by the Japanese central bank for almost a decade, which contrasts with a strengthened dollar after interest rate hikes announced by the US Federal Reserve (Fed). The increase in yields on US Treasury bonds has deepened this trend, which makes imported raw materials even more expensive, on which the world’s third largest economy is highly dependent and which have skyrocketed globally as a result of supply problems and of the Ukrainian war.
The Tokyo Stock Exchange has also been divided in recent days by the double effect of a cheap yen for Japanese companies, and after falling the day before, its main indicator, the Nikkei, reached the mid-session break today with an advance of 31.11 or 0.12, to 26,830.82 points.