(MENAFN) In 2022, the Japanese yen has edged closer to levels that could trigger government intervention in the currency market, as the dollar remains steady while awaiting further robust economic data from the United States. Early in the Asian trading session, the yen was observed at 151.52 against the dollar, nearing the threshold of 151.94 that prompted Japanese authorities to intervene in October 2022 by purchasing the currency.
Despite Japan's recent departure from its negative interest rate policy, the yen has struggled notably against the dollar, emerging as the worst-performing major currency for the quarter ending this month. The yen's depreciation has exceeded seven percent against the dollar, even following the policy shift, raising concerns among market participants.
In response to the yen's depreciation, Japanese officials have been issuing frequent warnings against speculative movements in the currency markets. Moreover, market sentiments are increasingly apprehensive about the potential breach of the 152 level against the dollar. Finance Minister Shunichi Suzuki emphasized Japan's readiness to consider necessary measures if the yen experiences a rapid decline, indicating a willingness to intervene in the currency markets to stabilize exchange rates.
Bob Savage, head of markets strategy at BNY Mellon, noted the significance of the Bank of Japan's recent rate hike, marking the end of an eight-year period characterized by negative interest rates and unconventional monetary policies. While initially perceived as a minor event, the rate hike holds broader implications for Japan's economic policy landscape and its impact on currency dynamics.
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