Japanese Finance Minister Shunichi Suzuki has expressed concerns about the significant decline of the yen against the US dollar. He stated that authorities are closely monitoring the situation with a sense of urgency and emphasized that rapid and one-sided movements in the currency are undesirable and could have a detrimental impact on the economy. Suzuki mentioned that necessary actions will be taken to prevent any damage to the economy.
The yen weakened to 160.88 against the dollar, marking its lowest level since 1986. This decline is attributed to several factors, including the US Federal Reserve signaling its intent to maintain higher interest rates and concerns about political uncertainty in Europe ahead of the French parliamentary elections. In response to the currency’s fall, Japan is considering intervention to support the yen, as it did in April when it bought a record amount of yen.
Since early 2021, the yen has lost more than one-third of its value as investors sell off the currency due to interest rate differentials between the US and Japan. While the US Federal Reserve has been raising interest rates to combat inflation, Japan’s central bank has maintained low borrowing costs to stimulate economic growth. The weakening yen has benefited Japanese exporters but has increased the cost of imports, especially food and fuel, leading to financial strain for households.
The decline in the yen’s value has impacted various sectors in Japan, including tourism, which relies heavily on foreign visitors. The weakening yen makes Japanese goods more expensive for foreign buyers, which could deter tourists from visiting Japan or lead them to spend less money while there. Additionally, small businesses may struggle financially due to increased costs associated with imports and reduced revenue from tourism.
However, despite these challenges, some experts believe that intervention by Japan could help stabilize currency fluctuations and prevent excessive depreciation of
